How to price home when selling

Question

How do you like to price your homes when you are selling?  A couple of the books I've read say to double what you paid.  I was thinking that would be a good minimum to aim for, but would think you could sometimes make more by pricing near market value.  
My plan is to sell on payments, but sell for less for cash.  
How do you know market value?  Do you use the NADA guide?

Terry Drake · Answer

Listed on craig's list..  I check it everyday to see whats out there but you'll find more deals by driving through parks and befriending the park manager.

Marilyn A. · Answer

On the other hand, our property taxes are way high. Ugh!

By the way, Terry, how did you find your first deal?

Marilyn A. · Answer

Thanks for the insight, Terry.  
You make a good point about all the costs involved in moving into the home.  If I read correctly, we don't have sales tax on used homes here in Texas, and the title transfer is only $55.  So that's at least one good thing about Texas. :D

Terry Drake · Answer

I've always liked the way Texas does business!

Terry Drake · Answer

For the first deal I would say to buy as low as you can, add holding cost, any other out of pocket expenses and double it.  You will have plenty of deals you can squeeze ALL the juice from later.  For now you just want to double your money, learn what you can, and sell it quick.  
          
          My first deal worked out to be less than double ($2500 out of pocket, $1500 profit and took a month of my time) but I learned a lot and the second deal almost tripled my money (2k out of pocket, $3500 profit) with less then half a day of time invested. Just hurry up and buy/sell your first so you can get to the second! :wink:
          
          Also Lonnie made a good point about staying in the 2k-3k out of pocket range to get your money back the quickest.  If you start spending more then that, it's either going to take longer then a year to get your money back or limit your buyers to the few with a thousand dollars to put down.
          
          I find that $495 is a hard pill to swallow for some of these people (at least in this area) with their other out of pocket expenses (sales tax, title transfer, registration, insurance, lot rent, and possible deposits to the elec and water company). 
          
          $500 down
          $200 lot rent pro rated
          $250 sales tax
          $175 title transfer/registration
          $1125
          
          If you want or have to make it more affordable to make the sale, you can keep the title in your name until next month to give them a couple weeks of paychecks before coming up with the sales tax/reg/transfer.

Marilyn A. · Answer

Thank you for the great information, Jonathan!

Jonathan V. · Answer

Best way to track market value would probably talk to the park managers, they could tell you what homes have sold for in the past.

Or keep your eyes open on what people are selling for, and when they are no longer listed, assume that they were probably sold.  If you see someone w/ a high price listed for a long time, that price is too high for that home.  If you see a person list for a low price, and it's gone the next day, that price is too low.  (unless your aim is to liquidate quickly)

Generally speaking, the best way to structure is to get your money back within 6-10 months, ASAP.  So if you pay $4,000.  Try to get $1,000 down and $300/mo for ten months.  Then decide how much you want to make off the home past that.  (I.e. if you want just $4000 more than what you paid, make the term 24 months).

If your selling on terms, another good way would be to look for rental prices in the area.  For example you have a 3/2 16 x 70.  Look around for rental rates for a 3/2 home or apartment that is in the area.  If a comparable price is $700 for that 3/2 brick home rented.  Make your payments $700/mo.  (Don't forget lot rent and insurance as well)

So with that example, and a $300/mo lot rent + $75 insurance.  You sell for $325/mo for however long you want.

Those are just some ideas.  GL.