Especially in today’s sellers’ market, setting the right price for your house is your smartest sales tool. The bottom-line “how-to” answer is easy. Ask a qualified real estate professional who works with a trusted lender, like Citywide, to do the work for you. Arriving at the most accurate asking price involves up-to-the-minute research and experienced judgment. However, if you want to know more about how it’s done so you can be sure you agree with those experts, read on.
Know the Goal
The primary goal of the right price is to maximize demand and get more buyers to look at your house. If your price is on the high end, the house is more likely to sit on the market longer or require a price drop that can send the wrong message to buyers. If your home is underpriced, it could decrease future buying power or scare away buyers because they think something must be wrong with it.
When your house is priced competitively from the start, you won’t be negotiating with just one potential buyer. You’re likely to have multiple buyers competing for the house, potentially driving up the final price above what you’re asking. Your house should be priced to sell immediately. When your house is seen by a greater number of buyers, more than one of them may be interested, and it is more likely to sell at a price you will be happy with.
Coming up with the right price is a balancing act, which takes us back to our first advice—ask a qualified real estate professional to help you. Your agent can help you evaluate the market and resist the temptation to overprice your home, or to be fearful and underprice it. You’re better off “hitting the sweet spot” the first time around.
Avoid these 7 Mistakes (For more details, see this article on realtor.com.)
- Basing your price on how much you paid or how much you still owe
Everyone hopes they will make a big profit and be able to pay off their mortgage when they sell their home, but buyers only care about getting the best deal possible in today’s market. If they can’t afford your house, they’ll take their money elsewhere.
2. Expecting to get reimbursed for renovations
It’s logical to think that you can pass along the entire expense of your renovated kitchen or bathroom to buyers. The truth is that most remodeling projects result in an average of 62 percent return on investment. This can vary depending on location and the current market. Ask your agent for information on comps in the area. You’ll find it’s usually a good idea to skip major remodels right before a sale.
3. Leaving too much room to negotiate down
Pricing your property too high, thinking you’ll leave prospects with room to negotiate, may scare away legitimate offers. Most buyers search for homes online, screening by price, so they may not even see an overpriced property. Price your property at or just slightly below the going rate. Today’s highly informed buyers are likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.
4. Not shopping your competition
You might assume your home is more or less the same as others in your neighborhood, but small differences can add up to big discrepancies in price. For example, an extra half-bath in the home next door or the fireplace in your living room should be taken into account. Spend some time looking through local listings online and attending open houses in person to figure out how your home compares to others, both in features and what they are actually selling for, not just the price. See number 5.
5. Basing your home on a neighbor’s asking price
Just because your neighbor is asking for a certain price on her property doesn’t mean she’s going to get it. She might not really need to sell and may be okay with letting it sit on the market for a longer time. A more accurate benchmark is to look at the prices on recently closed sales and how long they were on the market. These are available through a comparative market analysis from a realtor and will give you a better idea of home values in your area.
6. Getting emotionally involved
All sellers think their home is worth more than it is. All of them. Just because you raised a beautiful family in your house or have participated in nearby amenities, like skiing or the arts, doesn’t mean potential buyers will see themselves doing the same, or that they’ll pay a premium for the opportunity to do so.
7: Failing to quickly and decisively reduce
If your home goes several weeks without an offer, it’s likely priced too high, especially if homes in your area have a short average number of days on market, which is quite common in 2021. Rather than making a small price cut and risking having to do it again in another month, make a large and decisive price cut—$10,000 or more—that will attract buyer attention and show you’re serious about selling now.
How a Comparative Market Analysis Helps to Price It Right
A professional Market Analysis can give you an accurate, reliable foundation on which to price your home for a quick sale. The same is true when refinancing or tapping into your home’s equity. Many agents will offer a competitive market analysis for free in hopes that you will hire them. Here’s what the professionals do:
- Evaluate your home’s location, lot size, age, square feet, condition, number of bedrooms and baths, and its extra features.
- Assess the condition and appearance of your home’s interior and its curb appeal, and help you determine what repairs or refurbishing could help sell your home at its best price.
- Review the assessed value of your home, its previous sale prices, your maintenance and utility costs and your local taxes.
- Compare your home with similar properties in the area that are currently for sale or recently sold.
- Take into account current real estate market conditions, interest rates and lenders’ criteria.
Use Online Tools to Calculate a Home’s Value
You can use online valuation tools to help you calculate your home’s value yourself. Many online lenders and real estate sites offer these tools, which are commonly referred to as automated valuation models. The tools access online public records relating to your house, including deeds of ownership and tax assessments. Then, using advanced mathematical modeling, the tools calculate your home’s value according to recent sale prices of other homes in the area. Often, current listing prices of other homes are used, as well. If that sounds just a little bit too complicated—you guessed it—use a professional’s help.
Get a Professional Appraisal
Many homeowners go the traditional route of getting a professional appraisal to determine the value of their home. Why? Because most lenders require an appraisal before approving a buyer for a mortgage. If you want to sell your home quickly, having the appraisal in hand is one way to accomplish this goal.
When you want to sell for top dollar—and who doesn’t—it’s smart to have the right price the day your home goes on the market. When you offer your home at its true market value, you give yourself the best chance to get the highest offer in a reasonable amount of time.