Pricing Your Home
Pricing your home is both an art and a science. The optimal price results from objective research and the law of supply and demand.
The right price should:
- Attract buyers
- Allow you to earn the most money possible
- Help you sell as quickly as possible
Price is the primary factor homebuyers use to determine which homes they view. Remember that, although the price is set by the seller, the value of the home is determined by the buyer. Avoid allowing enthusiasm or wishful thinking to negatively impact better judgment.
The Importance of Proper Pricing
- Faster sale and less inconvenience
- Exposure to more buyers
- Increase numbers of buyers' agent responses
- Generates more advertising/sign calls
- Attracts higher offers
- Means more money to seller
- Avoids being "shopworn"
What really matters is how your home stacks up against the others currently offered for sale and recently sold in your neighborhood. Buyers compare.
Common Reasons for Overpricing
- Seller moving to a higher-priced area
- Seller paid too much when s/he bought
- Lack of factual data
- "Bargaining room"
- "Move isn't necessary"
- Outdated county assessed value
- Emotional attachment
Dangers of Overpricing
- Most of the sales activity occurs in the first week of marketing. A properly priced home creates immediate urgency for buyers.
- Buyers have seen all the available homes in their price range and are waiting for the "right house" to come on the market. That's why when a house is priced right, it sells quickly.
- The buyers' lender's appraiser must support the negotiated purchase price. Overpricing can lead to loan rejections and lost time.
- If you set your price too high, buyers won't even bother to look at it.
- Buyers and agents are aware of long market times. They are often hesitant to make an offer because they fear something is wrong with the property. (There was! The price!)
- Buyers' agents use your overpriced house to sell properties priced at market value.
- Carrying costs.
The Role of a Real Estate Agent in Pricing
- Provide you with a comparative market analysis (CMA), a comparison of the prices of recently sold homes that are similar in terms of location, style, and amenities. A CMA is a report that analyzes and compares your property with previously sold homes, homes currently under contract, homes that are currently active on market, and homes that have canceled or expired listing agreements. We give you the data. Experience counts.
- There is no magic number for real estate values.
- We work in ranges of value. Like appraisers, we bracket the value by using comparable properties.
- The market determines value…together we determine the price.
- Determine the price based on these factors:
- Market time
- Financing terms offered