Pricing Your Home
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 an understanding of the current market.
The right price should:
- Attract buyers
- Allow you to earn the most money possible
- Help you sell as quickly as possible
Price is a primary factor for most homebuyers when assessing which homes they want to view. Overpricing is a common mistake that can cost you in the end, so be sure assess all relevant market data with you and your realtor. While many factors impact a home’s price, including the home’s location, age, updates, and the state of the real estate market, it’s also important to remember that the value of the home is determined by the buyer.
The Importance of Proper Pricing
- Faster sale and less inconvenience
- Exposure to more buyers
- Increases Realtors® response
- Generates more advertising/sign calls
- Attracts higher offers
- Means more money to seller
- Avoids being "shopworn"
Buyers will be comparing how your home stacks up against the other homes that are currently offered for sale and recently sold in your neighborhood.
Common Reasons for Overpricing
- Over-improvement of home
- Not enough equity in home
- Original purchase price too high
- Move isn't necessary
- Assessed value not in line with current market
- Emotional attachment
- Opinion of family and neighbors
- Inexperienced real estate agent
Dangers of Overpricing
- 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.
- Serious buyers who have seen most available homes in their price range are waiting for the "right house" to come on the market. That's why if a house is priced right, it will sell quickly. The buyers are there waiting for it.
- Don't assume that you can start with a high price and reduce it later. By the time you decide to lower the price, it may be too late, as interest will have already waned.
- A major cause for concern is appraisal problems; overpricing can lead to loan rejections, terminated contracts, and lost time.
- Even if your home is nicer than other homes in the same area, your house won't be picked for showings if you set the price too high.
- Buyers and agents become aware of the long exposure period and often are hesitant to make an offer because they fear something is wrong with the property.
- You might help sell similar homes that are priced low.
- You could lose money as a result of making extra mortgage payments while incurring taxes, insurance, and unplanned maintenance costs.
The Role of a Real Estate Agent in Pricing
- Provides you with a comparative market analysis (CMA), a comparison of the prices of recently sold homes that are similar in terms of location, style, size, condition, and amenities. A CMA is performed by comparing previously sold homes in the area, and currently active homes to know your competition.
- Understands that the market is always changing and a number of factors can change the estimate of a home. There is no "exact price" for real estate.
- Keeps in touch with market trends and keep up to date with market activity of comparable homes.
- Estimates your net proceeds.
- Helps to determine offering incentives.
An agent has NO control over the market, only the marketing plan. Never select an agent solely based on price.