Pricing Your Home Accurately
Pricing your home is both an art and a science. Many of us wonder and worry over the question, “how much is my house worth?” Selling a house is no easy task, and the cost of selling a house often extends beyond the financial and into the temporal, requiring a lot of time and research to find the best number. Valuing your house at the optimal price is the result of both objective research into comparable properties and an instinctive feeling about your property and the current market. In a word, it is going to take more than a “sell my house” calculator to find out.
The Right Home Value Estimate Should:
- Allow you to earn the most money possible
- Help you sell your house fast
The simple fact is, price is the number one factor that most homebuyers use to determine 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.
The Benefits of Accurately Pricing Your Home
- Sell your house fast with little inconvenience
- Exposure to more buyers, and gains the interest of many buyers
- Captures the attention of quality realtors
- Generates more advertising/sign calls
- Attracts higher offers from buyers, which means more money for the seller
- Keeps your home from becoming "shopworn"
- What really matters is how your home stacks up against the others currently offered for sale and recently sold in your neighborhood. No buyer looks at just one home, and often compares many homes. You can bet that the price is a huge factor in those comparisons.
Common Reasons for Overpricing
- Over-improvement. You need to know when to quit prettying up the house.
- Financial need.
- The house is in a higher-priced area. Neighborhood reputation can be a big influence on buyers, but a negative one on sellers who overestimate their home’s value.
- Original purchase price was too high. A seller will feel cheated if they feel they paid more than they should have.
- Lack of factual data about the housing market and home value.
- Bargaining room. There is still room to profit with a more appropriate price.
- When the move is not necessary. Owners have a tendency to set too high a price when they are moving for the luxury of it.
- Inaccurate assessed value.
- Emotional attachment to home. Your good memories in the home are not inherited by the sellers, so keep that in mind when pricing.
- Opinion of family and neighbors may create pressure on the seller.
Dangers of Overpricing Your Home
- The most important activities for marketing 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 onto the market. They believe they have seen it all, but still hold the hope that they can be swept off their feet. If a house is priced right, it will sell quickly. The buyers are there waiting for it–the seller just needs to find the right price.
- 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. Houses that stay on the market too long create an uneasy, distrustful feeling in buyers who may feel the house has something wrong with it.
- A major cause for concern is appraisal problems. Overpricing can lead to loan rejections and lost time, which in turn leads to waning customer interest. Make sure the right steps are taken here.
- 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.
- 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, when in truth the problem is the seller’s home value estimate.
- A high price can attract the wrong buyers. It is common for buyers to be more fickle if they feel the price is too high.
- Fewer potentially qualified buyers will respond.
- You might help sell similar homes that are priced low. You should want to beat the competition, not help it.
- 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 Your Home
A good real estate agent will provide you with a comparative market analysis (CMA), which is a comparison of the prices of recently sold homes that are similar in terms of location, style, and amenities. A CMA is performed by comparing previously sold homes in the area, and currently active homes to know your competition. Even with a quality realtor by your side, it is important to remember the following:
- There is no "exact price" for real estate
- We don't tell you what we think your home is "worth".
- The market determines value…together we determine the price.
- You determine the price based on the factors you control
Financing alternatives provided
Keep in touch with market trends and keep up to date with market activity of comparable homes.
Estimate your net proceeds.
Help to determine offering incentives.
Remember: An agent has zero control over the market, only the marketing plan. Never select an agent based on price. Quality matters above all else.