Every seller looks for it: the home sales price sweet spot. The spot where your home isn’t priced so high that you’ve discouraged people from even looking, or so low that you’re leaving money on the table. But how exactly does your realtor arrive at that magic number?

Getting it right is key, not only to make the most potential money, but also to sell your home as fast as possible. Homes that are priced too high will languish on the market, making buyers wonder what was wrong with them even if you do eventually adjust the price to be more competitive.

Granted, it’s more of an art than a science. But, as Part 3 of our “How to Sell Your Home” blog series, here are 4 of the steps your real estate agent will likely consider when setting your ideal home sales price.

1. Prepare a comparative market analysis

The comparative market analysis (CMA) is the most important component of the listing equation.

A CMA is a report that offers stats on other homes in your neighborhood to help determine the best possible price. Usually the CMA will list comparable homes (ones as much like yours as possible) that have sold in your neighborhood in the past 6 months. Among the elements it compares are:

  • Square footage
  • Features, such as number of bedrooms and bathrooms
  • Amenities, like whether it has a pool, upgraded appliances, etc.
  • Condition of the home, like whether it’s been recently remodeled
  • Days on market
  • Location of the home, like if it’s on a quiet cul-de-sac or near a noisy railroad

The CMA assists in setting your price by looking at the original listing prices and then comparing them with what they actually sold for in order to see how hot the market is. It’ll also show which houses had to drop their prices, the scenario you’re trying to avoid.

2. Determine what your distinct amenities are worth

Many buyers believe that their extra bedroom or oversize lot is worth far more than it is. Realtors have a better sense of what market demand is — maybe in a neighborhood of retired people, your bigger yard is in fact a liability due to all the extra work it’ll entail to maintain it. Or maybe potential buyers want fewer, larger-sized bedrooms and won’t consider that fourth, smaller room to be an advantage.

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Unfortunately, many sellers learn that they aren’t necessarily going to get out as much from their improvements and upgrades as they put in. In fact, Remodeling magazine’s annual “Cost. vs. Value” report found the average return in resale value was 64.3 cents on the dollar for the 29 projects it rated. That’s why an agent’s unbiased opinion is critical.

3. Consider the current market conditions

If your housing market (and by that we mean your specific town or neighborhood, not the state or country) is hot, hot, hot, with homes being snapped up as soon as soon as the listing hits, you might be able to price on the high end. But if the market is saturated with homes just like yours that are languishing, you might have to start with a lower price to boost interest and create foot traffic. The age-old rule of supply and demand will be a major factor in pricing your home.

4. Let your agent do their magic

Of course, all this intel is just the baseline for the price. Your real estate agent’s unique knowledge of the area and market and what buyers want is what allows them to accurately assess your house for all its unique characteristics. They also may have some other little tricks, like pricing it to allow a bit of negotiating room, or pricing it in a range that’ll help it show up in the most internet searches.

In case you missed Part 1 and Part 2 of this series, find out which 6 things might be ruining your home’s resale value and how to stage your home like a pro.

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about Cathie

Cathie Ericson writes about personal finance, real estate, health, lifestyle, and business topics. When she's not writing she loves to read, hike, and run. Find her @CathieEricson.