How to Price Your Home: All Essential Factors
When it comes to selling your home, the price is one of the most crucial decisions you’ll have to make. Aiming low will ensure the quickest sale but going high will get you the most return. Finding the middle ground can be a huge challenge for even the most experienced sellers.
Selling a home is very different to selling any other valuable asset. Your home will come with a market value often identified by a surveyor. The aim is to achieve a final sale price that is as much in line with that market value as possible.
With other assets, sellers can advertise a higher price than they realistically expect to achieve as they know all buyers will try and barter them down. When it comes to home selling, time plays a far more impactful role. The longer a house is listed, the less in demand it is likely to be, so going in with a price that is too high can put off prospects and prolong the amount of time your home is listed, which in turn decreases its value. If your home is on sale for too long, you may end up having to sell it for less than its estimated market value. This is why it’s so important to start at the right price or react quickly if you’ve got it wrong.
Identifying the ideal price
Your price shouldn't be based on what you need or want to achieve from the sale. It needs to be based on what buyers are looking for and how the home you’re selling compares to others in the market. Once you have your home's market value estimation, you should check out other homes in the area. How do they compare? How much do you get for your money and how quickly are homes selling in your market?
It’s important to find the answers to the above questions as you need a solid understanding of whether you are selling in a buyer's market or seller's market. In a seller's market, demand for homes in the area is strong and prices appear to be high and rising. In a buyers market, homes will tend to remain listed for long periods of time due to a lack of demand and prices will be lower than you would expect for what's on offer.
Consult with your agent
It’s a good idea to see if your real estate agent can conduct a Comparable Market Analysis (CMA) for you. This analysis will give you a comprehensive breakdown of how they would price your home. There’s nothing stopping you from having more than one CMA completed by two separate agents. If you do this, take note of where they differ and see if you can get them to explain how they’ve come to their differing conclusions. Keep in mind that it is in the agent's interest to give you good news as many will be keen to do whatever it takes to get your listing. If their estimates sound too good to be true compared to everyone else's, take it with a pinch of salt.
Not using an agent? You might want to look into having an appraiser give you a valuation. This can be pricey but will often prove crucial especially if you’re not seeking any other professional opinions.
Have a pricing strategy
In a seller's market, it can sometimes be advantageous to actually set your price lower than the market value. This tactic has a chance of igniting a bidding war within the swarm of competing buyers eager to buy in your area. This is a sure way to receive a high volume of offers and have your home sold as quickly as possible!
Believe it or not, superstition plays a larger role in home buying than you would expect. It’s a good idea to make everything about your home as attractive as possible and this includes avoiding numbers that will some prospective buyers off. 666 is an obvious number to avoid. Speak to your agent for further advice on pricing strategies for the local area.
The exact numbers you chose can have a major impact in terms of search results too. One of the most common ways that buyers tend to search for listings online is by pricing range. You want your price to fall within the most common price ranges, so chose carefully. For example, if you set your price at $410,000, it won't be seen by people who are searching for properties within the $300,000 - $400,000 price range. Try and aim for 99s. I.e. $299,000 or similar so that your listing falls within set categories.
Be wary of bidding wars
Bidding wars sound like a dream scenario but be careful. If someone's offer is outrageously good be sure to double check their finances before getting your hopes up too much. A fair offer from someone with stable finances is a far better option than an amazing offer from someone with an unsturdy financial position. Remember that if you’re sale collapses, your home will have to go back on the market and this can cause all kinds of inconveniences for you in terms of logistics, timing and costs.
Its best to thoroughly go over the positions of all your prime offers before making a final decision and your final decision should almost certainly be based primarily on dependability.
Have a realistic perception of your home
It’s easy to think your home is special and deserves more. The more research you do into your local market, the more you will look at your home from the perspective of potential buyers.
Price cuts in real estate sales can be fairly common in all types of markets. After all, the key to selling a home is to react appropriately. You don't want to start with a large price and cut it down bit by bit over time, because the longer a property is listed without sale, the less desirable it becomes to buyers who can see it’s been unsold for some time. If you think you’ve got it wrong and priced too high, make a decent adjustment as soon as you can to prevent being caught in the “dropping in price over time” zone.
You can do it! Keep researching, have a plan and then plan some more and you’ll come out smiling!