Pricing a residential property for a quick timely sale can be more daunting than it sounds… especially when trying to turn a healthy profit or at least maximize the returns. 

As we take a look at pricing methodology, the “how much to ask” dilemma appears to persist with the higher cost homes on the market.  But for entry level homes and condos, there’s an easy yardstick rule of thumb that just downright makes sense.

Jim the Realtor over at bubbleinfo.com explains entry level pricing best with his post on “Figuring How Much to Pay.”  In his words:

Because they are the very beginning of the real estate food chain, it would be smart to keep your expectations of value directly in line with what they will rent for.  When renters can buy for the same as rent, they usually jump at the chance.

That actually makes perfect sense, doesn’t it?

After all, in a situation with all things were equal, including price, who wouldn’t want to go ahead and buy and build up their own equity as opposed to paying lofty rent bills that get them nowhere financially.  I know that there are plenty of good reasons to rent, but most folks would cherish the opportunity to buy when it is financially feasible.

Accordingly, bubbleinfo.com goes on to explain,

Depending on your down payment, you can figure that condos that rent for $1,000 per month are basically worth $100,000 to $120,000 when rates are around 8%.

The numbers add up and make sense, especially when considering the situation of a first time buyer.  The price range would obviously depend on the property and the real estate market where it was located, but the overall concept carries.

A good agent would be able to convince the potential buyer why they shouldn’t rent when they can buy a place themselves.  Let the agent take care of the details of marketing and determining exactly the right price, but do keep the rule of thumb in mind.

For an ultra fast sale, bargain price right below the expected actually cost of renting value that you determine for your property based on the equation.