Pricing Your Home Correctly
Pricing your home accurately is the most effective way to ensure a successful sale. No amount of marketing can sell an overpriced home. Many sellers are tempted to list their home with the agent who quotes the highest price. Please keep in mind that the agent does not set the price, the seller doesn’t set the price — the market sets the price, or value, of your home.
When I complete a comparable market analysis for your home and recommend a pricing strategy, I consider homes similar to yours in size, price, range and age; your area competition and how many months of inventory exist, the best price to reach two pricing brackets, and the cost of new construction in your area, among other factors.
Factors that Influence Market Value
The price of your home must reflect its location. The better the location, the higher the acceptable price. School districts, traffic levels, highway accessibility all need to be considered in determining the value of your home’s location.
Recession, inflation, interest rates, mortgage availability, competition and the public’s perception of the general economy all make up the market. It may be a buyers’ market or a sellers’ market. The pricing of your home must reflect the current nature of the market because we cannot influence the market. We can, however, take advantage of market conditions.
Your Home’s Condition
The pricing of your home must accurately reflect its condition. The general upkeep and presentation of your home is critical to obtaining the highest value for your home. Nature of the roof, plumbing, carpets and paint all relate to condition. Basic rule: If you can smell it, I can’t sell it!
Other factors to consider include the asking and selling price of other homes in the area, buyers’ perception of your home and features and size of your home, among others.
Factors That Have No Influence on Market Value
- What You Paid
- What You Want in Net Proceeds/What You Owe
- What You Spent on Improvements
- What the Neighbors Say
- What Other Agents Say
- Cost to Rebuild
Benefits of Properly Pricing Your Home Correctly
Faster Sale: The proper price gets a faster sale, which means you save on mortgage payments, real estate taxes, insurance and other carrying costs.
Less Inconvenience: It takes a lot of time and energy to prepare your home for showings, keep the property clean, make arrangements for children and pets, and generally alter your lifestyle. Proper pricing shortens market time and reduces inconvenience for you.
Increase Agent Response: When agents are excited about a property and its price, they make special efforts to contact all their potential buyers and show the property.
Better Response From Advertising: Buyer inquiry calls are more readily converted into showings when the price is not a deterrent.
Higher Offers: When a property is priced right, buyers are much less likely to make a low offer, for fear of losing out on a great value.
More Money to You: When a property is priced right, the excitement of the market produces a higher sales price in less time. You NET more due to the higher sales price and lower carrying costs.
Drawbacks of Pricing Your Property Too High
Reduces Activity: Agents won’t show the property if they feel it is priced too high.
Lower Advertising Response: Buyer excitement will be with other properties that offer better value.
Loss of Interested Buyers: The property will seem inferior in amenities to other properties in the same price range that are correctly priced.
Attracts the Wrong Prospects: Serious buyers will feel that they should be getting more for their money.
Helps the Competition: The high price makes others look like a good deal.
Eliminates Offers: Since a fair priced offer will be lower than asking price and may insult the sellers, many buyers will just move on to another property.
Causes Appraisal Problems: Appraisers must base their value on what the comparable properties have sold for. If the appraisal is lower than the sales price, the buyers can withdraw their offer or ask that you accept the lower price.
Lower Net Proceeds: Most of the time an overpriced home will eventually end up selling for less than if it had been properly priced to begin with, not to mention the extra carrying costs.
Pricing Your Home According To Brackets
Buyers search for homes online in price brackets, therefore it is better to be positioned to appear in two brackets. For example, buyers may search for homes between $300,000 and $350,000, and again between $350,000 and $400,000. So pricing your home at $350,000 puts it both brackets and more people see your listing.