5 Rules To Follow When Pricing Your Home For Sale
Selling your home can stir up a whole mess of emotions. You’re likely excited about moving to a new place, but get gloomy at the thought of leaving the old one behind. You’re also challenged with getting your house ready to sell, which in itself adds a whole new set of tough, unfamiliar tasks to your plate. One of the trickiest tasksY: pricing your precious home for the market.
Pricing your home is one thing you don’t want to rush into or go about without doing your research. In an effort to help you sell your home for what it’s worth, we’ve listed out 5 rules you’ll want to follow when pricing.
Rule #1: Don’t set a list price based on what you’ve invested in improvements or maintenance.
While you’ve lived in your home, you’ve likely put money into improvements and updates that would eventually help you sell your home easier, quicker, and for more. As long as they were smart updates that added value to your home in ways current buyers are looking for you’re sure to see some kind of return, but it’s not necessarily a dollar-for-dollar amount. One mistake many sellers make is adding up the exact amount they’ve invested in maintenance and improvements to their home, and then weighing heavily on that number when pricing. But it’s not always a perfect scale.
Rule #2: Avoid overpricing and underpricing–get the price just right.
Getting the price right is critical to a successful sale. Too low and it will sell quickly but likely for less than you could have sold it for. Too high and you could end up sitting on the property for months or even years!
Overpricing your home can actually have a far more detrimental effect on your ability to sell your home. When your house is overpriced, realtors with buyers in that price range will guide them towards houses that are actually worth their price. This means your best prospective buyers may never see your home because it was listed out of their price range.
Plus, you lose out on a huge opportunity to make a good first impression right off the bat. A new listing generates excitement in the market. Your home will see the most activity during the first 30 days. This is also when you’re likely to see the highest and best offers on your house. Eventually, your listing can become stale, and develop a reputation that, in the real estate community, will be tough to overcome. As if it gets worse, once your house has been on the market for long enough, you’ll lose negotiating leverage as you find yourself having to justify the price to a wary buyer. In the end, an overpriced house will sell at less than market value.
Keep in mind these common misconceptions that lead homeowners to overprice or underprice their home:
- The original purchase price is not a factor in current price. Your home could be worth a lot more, or a lot less than when it was new.
- As we said in rule #1, not all improvements add to the overall value of your home. It’s possible to over improve a home for its size or neighborhood.
- Your favorite improvements won’t always equate to value in a prospective buyer’s eyes.
- Replacement value is not a valid measure of existing property value. Just as a used car is not worth the same as a new one, no matter how well maintained.
Rule #3: Get an accurate comparative market analysis (CMA) and market analysis.
Now that you know how important it is to avoid both over and underpricing your home, you’re probably left wondering how do I come up with the right price? The answer starts with a comparative market evaluation.
The purpose of a CMA is to price the property appropriately both maximize response and final sales price. A CMA attempts to estimate your home’s fair market value by honestly assessing:
- General area and specific location within a neighborhood,
- Property characteristics (number of bedrooms, baths, size, age, views, etc.),
- Features and amenities,
- Condition of your home,
- Comparable sales,
- Market conditions (current and projected),
- And more.
This information is truly vital when pricing your own home.
In addition to a CMA, you’ll want to consider a broad market overview when pricing your home. Find the total inventory of homes similar to yours and the average amount of time these homes were on the market to gauge a competitive price for your home.
Doing your homework when it comes to selling your home is sure to pay off when all is said and done.
Rule #4: Get an appraisal, but don’t rely too heavily on it.
An appraisal, or online home value estimate, can be a great starting point for pricing your home, but that doesn’t mean it should be used to set a selling price.
Appraisals take things like square footage, number of bedrooms and bathrooms, and size of the lot into consideration but sometimes fail to account for the quality of space, flow of the floor plan, and the house’s location. In addition, refinancing appraisals are usually higher than market value.
Rule #5: Never go in alone. Find yourself a great Realtor®.
One factor that can greatly impact the success of your home on the market, is your choice of Realtor®. With a good Realtor®, you gain industry expertise, market knowledge, and pricing advice.
An experienced Realtor® will have a good idea of what the current market looks like and what buyers are searching for. Based on that knowledge, they’ll be able to help you come up with a pricing strategy that will sell your home fast, and for what it’s worth!
If you want to sell your home quickly, and at the best price possible, you need a Realtor® who knows how to “work the market”, not someone who will just list the property and hope for the best.
At Spencer Properties, we will confidently list your home at a price that both you and prospective buyers can get on board with. Interested in chatting with our team? Reach out.