Pricing Your Home
Why it is so important that your home is correctly priced and marketed properly
"... Your home is your castle--even when it's for sale..."
The simple fact is - price is the #1 factor that most home buyers use to choose which homes they want to view. And it's important to remember that although the price is set by you, the value of the home is determined by the buyer. Try to avoid allowing your enthusiasm to impact your better judgment - overpricing is a common mistake that can cost you in the end. Without question, price is your most important sales tool. Here's why:
The period of best opportunity for selling a home at a reasonable price is the first four weeks after it is put on the market. Buyers who have seen most available listings are waiting for just the right house to come on the market. If your house is priced right from the beginning, you are in the best position to attract the maximum number of buyers able to pay the price your home is worth - and to sell your home within your timetable in the least amount of time possible.
If your house is overpriced, lookers are apt to be few and far between, with little chance of any offers to pay your unrealistic price. You may lower your price later, but by that time you will have missed many of the most interested buyers. Your listing may be overlooked by now from buyers as newer listings enter the marketplace.
How to Set the Right Price
What really matters is how your home stacks up against the other homes currently being offered for sale and recently sold in your neighborhood that buyers will be comparing to. Determine what features make your house stand out among others currently on the market. After all, buyers are comparison shoppers. Weighing the spending of a reasonable amount of money on cosmetic fix-ups that might enhance the marketability of your house and earn the highest possible sale price.
The right price is usually within 3-5% of market value (a constantly changing factor) and usually results in a fair-dollar sale within a reasonable amount of time. As we say, "price sells."
Why is Overpricing Risky
A price of more than 5% over market value may have these results:
- Buyers may resist viewing your home because they can find better values elsewhere. (Overpriced houses tend to sell the competition first.)
- Potential buyers who can't afford the price don't bother to look--or to make offers
- A buyer willing to pay an over market price may have difficulty getting financing. Lenders may not approve a loan if the appraisal is lower than the contract price. (The delay from a failed sale can mean missing out on the critical first 30-day marketing period.)
- Your unsold home will begin to get "stale," as the marketplace assumes there is "something wrong" with the house.
- 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.
- 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 start with a high price and the assumption that you can reduce it later. By the time you decide to lower the price, it may be too late, as interest will have already waned.
- Even if your home is nicer than other homes in the same area, your house won't be picked for viewing if you set the price too high.
- Attracting the wrong buyers who are looking to make low offers due to your home sitting on the market..
- Fewer potentially qualified buyers will respond.
- Lose money as a result of making extra mortgage payments while incurring taxes, insurance and unplanned maintenance costs due to being overpriced and sitting on the market.
The Importance of Proper Pricing from the start.
- Faster sale and less inconvenience to you will create a much more enjoyable selling experience.
- Exposure to more buyers when you are priced appropriately.
- Increases real estate agents and buyer response and interest because they know a well-priced home when they see one.
- Typically your first offer and those within the first 30 days attract the highest price for the seller
- Avoids being "stale” listing.
Is it Ever Smart to Under Price?
Setting a price below market value usually isn't preferable because you may be losing money. If time is more important than money and you need a faster-than-average sale, you may consider setting a bargain price to attract the greatest number of prospects. Market value delivers the optimum number of prospects at the best price for a quick sale.
Never determine your asking price by the following reasons:
- Financial need
- Purchasing in a higher-priced area
- The original purchase price was too high
- Lack of factual current data
- Leaving too much bargaining room
- Moving isn't necessary
- Local city assessed value
- Emotional attachment
- The opinion of family and neighbors
How a Market Analysis Helps Price it Right
Only a professional market analysis can give you the accurate, reliable foundation you need to price your home right. There is no "exact price" for real estate. The market determines value… real estate agent's job is to advise sellers on helping them determine the list price to best achieve the highest market value and price within a seller's time frame. Here is what we do to determine a fair market list price for your home.
- Evaluate your home's location and lot size; your home's age, size and condition; the number of bedrooms, baths, total rooms; the kinds of extra features you have (such as improvements, built-ins, garage, tool shed, spa);
- Examine the condition and appearance of your home's exterior and interior. We can help you determine what repairs or refurbishing may be needed to 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 area properties currently for sale or recently sold. Note current real estate market conditions with a practiced eye
- Keep in touch with market trends and keep up to date with market activity of comparable homes. Estimate your net proceeds.