Pricing your home is both an art and a science.
Achieving the optimal price is the result of knowing the current market, objective research of comparable properties and an evaluation of your home to recognize its positive attributes as well as any other factors that will influence the listing price. The right price should:
- Attract buyers
- Allow you to earn the most money possible
- Help you sell your home as quickly as possible
The simple fact is, price is the number one factor that most homebuyers use to determine which homes they want to view and make an offer on. And it’s important to remember that, although the price is set by you, the value of the home is determined by the buyer as they compare your home to the current competition. Try to avoid allowing your enthusiasm to impact your better judgment – overpricing is a common mistake that can cost you in the end.
The Importance of Proper Pricing
- Faster sale means more money to the seller
- Exposure to more buyers
- Increased realtor response
- More responses to advertising
- Attracts higher offers because buyers know it is priced right
- Avoids being “shopworn” by sitting on the market longer than it should
What really matters is how your home stacks up against other homes currently offered for sale. Buyers will be comparing what your home has to offer compared to similarly priced homes. So pricing it right from day one is very important.
Common Reasons for Overpricing
- Need – simply wanting more than it is worth
- Original purchase price was too high
- Lack of factual data to make a solid pricing judgment
- Wanting to leave to much bargaining room
- Move isn’t necessary so it priced just to test the waters
- Emotional attachment
- Opinions of family and neighbors who haven’t looked at any solid data
Dangers of Overpricing
- Most of the activity on your home will occur in the first few weeks. Pricing a home properly and then creating immediate urgency in the minds of agents and buyers is critical.
- Buyers who have seen the current available homes in their price range are waiting for the “right house” to come on the market. That’s why a house that is priced right will sell quickly and for top dollar. The buyers that are out there waiting won’t hesitate if they know it is the right one.
- Don’t start with a high price with the assumption that you can always reduce it later. By the time you decide to lower the price, it may be too late, as interest will have already waned and you end up losing money compared to if you had priced right to start with.
- Even if your home is nicer than other homes in the same area, your house won’t be picked for viewing if you set the price way too high.
- If the home is on the market for an extended period of time, buyers and agents become aware of the long exposure period and often are hesitant to make an offer because they fear something is wrong with the property or will make a low unrealistic offer.
- You can end up hurting yourself by helping sell similar homes that are priced right.
- You could lose money as a result of making extra mortgage payments while incurring taxes, insurance and unplanned maintenance costs.
The Role of a Real Estate Agent in Pricing
- Provide you with a thorough comparative market analysis (CMA). The CMA is performed by comparing recently sold homes in the area, homes currently under contract and active listed homes that are similar in terms of location, style and amenities.
- There is no “exact price” for real estate, but a good experienced agent can establish a fair value to maximize your return.
- I don’t tell you what I think your home is worth – the market determines value. Together we determine the price
- Keep in touch with market trends and keep up to date with market activity of comparable homes.
- Estimate your net proceeds
- Help to determine offering incentives.
- An agent has NO control over the market, only the marketing plan. Never select an agent just because of the price they suggest.