Pricing Your Home
Pricing your home is one of the top 3 most important components of selling.
Achieving the optimal price is the result of both objective research into comparable properties and a subjective view of your property in relation to the current market.
The right price should:
- Allow you to earn the most money possible
- Help you sell as quickly as possible
- Attract buyers.
The simple fact is, price is the number one factor that most home buyers use to determine which homes they want to view.
And it's important to remember that, although the price is set by you, the value of the home is determined by the market.
The Market Has Set the Price
Buyers will look at everything available in the market and buy the best fit for them within their budget. When a buyer is considering your home, they are thinking "which other home can I buy for the same amount of money?"
What really matters is how your home stacks up against the others currently offered for sale. Buyers will compare.
Once they decide yours is the best fit for them and they consider making and offer, they will look at what recently sold in your neighborhood. If they are financing, the banks will look at what recently sold in your neighborhood.
Pricing your home higher will not sell it for more.
To explore this let's think of the extremes.
If a seller listed their home for twice as much as the market value what would happen? Basically nothing. Buyers would not even come to see it.
If a seller listed their home for half price, what would happen? There would be hundreds of offers and with a very good agent, the price would be bid back to the market price or above.
If the market has already set the price what difference does picking the right agent do?
The right agent will be able to influence the price slightly higher. Since not all homes are the same, a good agent can convince a buyer to pay more than a bad agent can. Just think about your experience buying from a good salesperson that knows their numbers, that understands psychology and knows how to negotiate. Can't they increase the price of something with a slightly subjective price by 10%?
Some things to consider.
- 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 most available homes in their price range are waiting for the "right house" to come on the market. That's why if a house is priced right, it will sell quickly. The buyers are there waiting for it.
- Don't start with a high price and the assumption that you can reduce it later. By the time you decide to lower the price, it may be too late, as interest will have already waned.
- A major cause for concern is appraisal problems; overpricing can lead to loan rejections and lost time.
- 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 too high.
- 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.
- Attracting the wrong buyers.
- Fewer potentially qualified buyers will respond.
- You might help sell similar homes that are priced low.
- 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
- A good agent can look at all the properties that are competing and use their experience to help determine which are more desirable.
- There is no "exact price" for real estate, but you can get a nice price range.
- Help you understand how the market is moving to strategies the pricing. A market that is selling fast and has little inventory is very different from a market that homes it forever and there are a lot of properties for sale
- A good realtor can help you estimate your net proceeds once it sells.
- Help determine what are the best arguments to convince buyers to pay more for the home.
An agent has NO control over the market, only the marketing plan. Never select an agent based on price.