Deciding what price to ask for your home can be difficult. You want to get as much money as possible for your house, but you also don’t want to ask too much and scare buyers away. You want to price your home to sell fast, but you also want a fair price. It’s a delicate balance.
How much is your house worth? Price your home to sell
You never get a second chance to make a first impression. The first 2-3 weeks after listing a home are the crucial time to get buyers through the door. You want to get it right from the start.
If you price your home high to allow room for negotiation, it could work against you. Buyers can think you’re overpriced and might skip your home entirely.
You may fear underpricing your home, but in most situations, you will still end up with a fair price. Typically, the housing market will naturally drive the price up if you’re too low. Sometimes houses listed on the low side of market value attract many buyers and they receive multiple offers. Sometimes pricing a little lower sells your house faster and for more money than those starting off at a higher price.
Price it right: Things to Consider
Comps are the key to pricing your home right
Comps are simply homes comparable to your home that have sold in the past few months. Evaluating recently sold homes similar to your own gives you a wealth of information on how you should price your home.
Comps should be as close as possible to the same size, age, condition, and location of your home to make a more informed pricing decision.
- Use recent comps (within 3 months, if possible). Market prices can vary widely from season to season.
- Look at comps near your home (when possible). Comparing your house to homes on the other side of town can be misleading. Market values can vary drastically from neighborhood to neighborhood, sometimes even from street to street.
- Try to compare homes that have similar characteristics. The best comps are similar in square footage, age, condition, and features.
- Don’t just compare the listing prices of similar homes, but the actual sold prices. Some houses sell for more than list price and many sell for less.
- Look at how many days your comps were on the market. This will indicate how the initial listing price worked out for them.
- You can also look at expired listings. Look at how the expired listings were priced and learn from their mistakes.
Where do you find reliable comps? Your real estate agent will provide these to you in your comparable market analysis. While you can attempt to find your own comps, you don’t have access to all the latest and detailed information your agent does. Your agent has access to the Multiple Listing Service (MLS), which has all the up-to-date information on all the listings in your area.
Try to be objective
You chose to buy your home because you like it. And, after living in it for a while, you naturally have an attachment to it. You may think it’s desirable, but try to take a step back, look at the comps, and realistically assess the demand and desirability of your home. While it’s impossible to remove your bias, just recognizing that you have a personal outlook is helpful.
Try to put yourself in a buyer’s shoes. What would you look for in a home like yours? Is it updated? If not, how much will it cost to upgrade it? How large is the yard? Does it have a garage or parking? How do these things compare to other similar homes for sale? How desirable do you think your home will be compared to other houses for sale?
As an example, let’s say your home has been maintained but doesn’t have an updated kitchen like the one for sale down the street. Even though your house is similar in every other way, you might not be able to price it as high as the one down the road. But if you price your home a little lower, the lower price is more likely to attract a buyer. A lower price is almost always more compelling than features.
Think about how people do online searches for homes. If buyers are looking for homes priced between $175,000 and $200,000, they won’t see yours in their search if it’s priced at $203,000. It’s best not to get creative with your pricing structure.
Is it a Buyer’s Market or a Seller’s Market?
You also have to consider the current, overall real estate market. Your comps will help with this, but it’s always good to look at the bigger picture. The basic economics of supply and demand are a good indication of whether it’s a buyer’s market or a seller’s market.
A buyer’s market is when there are more homes for sale than there are buyers. Buyers have more choices so you may have to price your home a little lower to be competitive.
A seller’s market is when there are more buyers than there are homes for sale. Since there is a shortage of homes available for sale, prices tend to get pushed higher as buyers compete for homes.
A neutral market is less common but occurs when the number of buyers and the number of homes available for sale are in balance.
As you can see, there are many factors at play when deciding how to best price your home to sell. But, with a little homework, and the help of a great real estate agent, you’ll be well on your way to a solid sale!
Whether you’re selling or buying a home, the process can feel intimidating and overwhelming. But it doesn’t have to. At Coluzzi Real Estate, we answer all your questions and simplify the process. We’re here for you every step of the way. Please don’t hesitate to contact us today!
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