Price Your Home to Sell
Pricing your home is both an art and a science. Achieving the optimal price is the result of both objective research into comparable properties and a gut feeling about your property and the current market.
Benefits of Pricing Correctly:
- Generate high-quality buyers
- Create multiple offers to choose from
- Net you the most money possible
- Help you sell as quickly as possible
- Avoid your property becoming “shopworn”
The simple fact is, price is the number one factor that most homebuyers 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 what a buyer is willing to pay.
Buyers will be actively judging how your home stacks up against others currently offered for sale and recently sold in your neighborhood, and they will base their offers on that.
Try to avoid allowing emotions to impact your better judgment—overpricing is a common mistake that can cost you in the end.
Reasons Sellers Usually Overprice:
- They made improvements that are not valued by buyers
- They need a certain value
- They’re upgrading to a more expensive area
- They originally paid above market value for the home
- They don’t have factual data to support pricing strategy
- They don’t need to sell or can afford for the home to sit on the market
- They equate the assessed value with market value
- They’re emotionally attached to the home
- Their family/neighbors/friends have strong opinions on the home’s value
Unfortunately, overpricing a home can create serious troubles and stress for a seller, and every day the home sits on the market, it is at risk for becoming “shopworn” or less desirable to buyers.
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.
Common Results of Overpricing:
- The pool of potential buyers looking in that area will be limited, either attracting the wrong buyers or pricing out potentially qualified buyers
- The house sits on the market with no offers and interest wanes
- Even if the seller does get an offer, there is a concern that the property may not appraise for the list price, at which point the buyer will have to pay out of pocket to make up the difference or the seller will have to lower the contract price to the appraisal price anyway
- As the house sits, buyers and agents become concerned that something is wrong with the property and become more hesitant to write an offer
- An overpriced home actually helps lower priced homes in the neighborhood sell faster, because they look like a great deal compared to the overpriced home
- The seller loses money to extra mortgage payments, taxes, maintenance, and utilities
- Eventually, the seller will be forced to either take their home off the market or reduce the price. Although they may have now priced it in line with the market, the initial interest is long gone
- Buyers and agents will take advantage of the price reduction and submit lower offers hoping for a deal or negotiation
- Ultimately, the seller will end up netting less money than if they had priced it at market value to start
Don’t worry, there’s a simple way to avoid the pitfalls of overpricing: hire a real estate expert who can walk you through a comparative market analysis (CMA). A CMA is a detailed comparison of homes, similar to your home, that are currently on the market and recently sold in your area. The CMA provides non-emotional, factual data about what buyers are willing to pay for your home in the current market.
Keep in mind, there is no “exact price” for your home. The market provides a range, and then buyers who submit offers will tell you what they’re willing to pay.
Agents don’t tell you what your home is “worth”, and they have no control over the market. Their job is to interpret the market data and tell you what other homes like yours have sold for. Never hire an agent who promises to get you whatever you want for your home.