Pricing your home is like asking for a raise. What you think you’re worth is important, but it’s what your boss thinks that ultimately matters. Same goes for pricing your home, only in this case it’s the buyer who holds the decision-making power. Here’s how to make sure you (and your home) come out ahead.
How to price a property to generate interest, momentum, and better offers:
1. If a home is priced just below market, the excitement of the market produces more competition between buyers and higher sales prices.
2. Calls to realtors turn into showings when price is excellent.
3. When salespeople are excited about a home and its price, they make special efforts to contact all of their potential buyers.
4. At market value, you open your home up to more people who can afford it. More potential buyers, means more potential offers.
5. When a home is priced right, buyers fear they might lose out on a good home, so they are less likely to make lowball offers.
6. Keep in mind that statistics show that generally the first offer is the best offer.
7. When your home sells faster, you save carrying costs, mortgage payments and other ownership costs.
8. During the first four weeks your home is on the market, the most eyes are on your property—therefore it is essential to price your home right. Homes priced at market-value will ensure solid interest from brokers and buyers. See the chart at the bottom of the article.
The downside to overpricing
9. If your house is overpriced, agents are going to show similar homes that are priced more attractively. Your listing will get passed over.
10. Don’t overprice. If you do, it may become necessary to drop the price, often below market value, to compete with new, competitively priced listings. Once you start lowering the price, other agents and astute buyers wait for further price reductions which further reduces interest and momentum.
11. The most common mistake sellers make in overpricing is to use other ‘Listed Prices’ of properties to determine their sales price. A listed price is not the market value of a home. It is the ‘asking’ price of another seller and may have no relation to the actual market value.
determining the right selling price
12. To help determine a selling price, use Comparative Market Analysis or CMA. CMAs give the sold price of comparable homes in your neighborhood. Your realtor can get you this valuable information.
No Realtor, no friend, no neighbor can set the market value for your home.
Only the “Market” sets the price for a home.
June 28th, 2008 at 4:08 am
I agree pricing is the key to selling your home quickly. If the 12 tips above are followed you should have no problem getting qualified potential buyers in through your doors. Remember anybody can say “I can sell your home for that price” but if the market does not support it, it will not sell!
June 29th, 2008 at 11:29 am
I am seeing more sellers pricing their homes below or right were the last similar comparable sold. Not suprisingly, we see these properties go into escrow fast, and sometimes even sold for more than their list price. On the other hand, overpriced properties will sit on the market, and after a few price reduction, will end up selling much lower then if they had priced it more aggressively from the start.
July 2nd, 2008 at 2:49 pm
Great article. Seller’s need to understand this now more than ever.
July 4th, 2008 at 3:49 am
These points were played out in the neighborhood I live in. A townhome came on the market with an asking price of $565,000 which was $35,000 higher than what a similar townhome sold for recently. That home sat for months and had numerous price drops. Three months later another similar home came on the market but for $535,000. A week later it was in escrow and ultimately sold for $537,000. $2000 above asking. Meanwhile that first home continued to drop and went down to $499,000 before they decided to pull it from the market. It’s definitely smarter to price right from the start.
July 16th, 2008 at 4:51 am
If a seller has a good agent who can explain all this, and if the seller is smart enough to take their agents advice,they won’t have to go through the torture of having their home on the market for months and months.
By pricing their home correctly, they’ll sell it faster, which after, is what they want to do isn’t it?