So, you’re thinking about selling your home, but how do you figure out where to set the pricing?
I’ll give it to you straight — the worst feeling for a seller (and agent) is to have a beautiful home sit on the market without interest, especially in a strong market.
A homes list price is the first piece a buyer uses to qualify the home as an option for their search.
The “right” price for a home is based on market trends and what similar homes in the area are selling for at that time. Your agent can help you evaluate the market through a comparative analysis and determine what the most attractive pricing is. Homes can hold so much sentimental value, especially family homes, so it’s important as a seller to look at the data instead of assessing value based on what the home means to you.
Market value is the highest a buyer is willing to pay for a home and that should always be the target in your pricing strategy. Looping back to my previous blog post about working with the right agent, it’s important to price your home correctly from the start to give it the best chance at the strongest sale price and ensure the listing doesn’t get stale. Hire the right agent because they will use their expertise and market knowledge to assess the market and recommend the most competitive, strategic and fair price to list the home. Let’s roll through a couple common pricing questions you may be thinking about.
#1 So, why are homes priced a little lower sometimes?
In the simplest words, it’s marketing. Pricing is a part of the marketing strategy plain and simple, and sometimes the list number is there to attract the highest number of buyers. For example, if the homes anticipated market value is $925,000, your agent may recommend listing at $899,000 to catch the eye of buyers that are capping their home search at $900,000. A small difference for market adjustment is acceptable since buyers understand that comps-based value may vary a bit, but when sellers and agents abuse the list price for marketing is where they may cause trouble. Sometimes sellers and agents want to list a home too aggressively to get attention and that can backfire — when comps are analyzed, buyers are shocked that the market value of a home is so much higher than the list price and feel like they’re having to pay way more than initially anticipated, ultimately turning them off from the property. The right pricing from the get-go would have set expectations all around so buyers could realistically meet the expectations of the seller.
#2 What happens if a listing sits on the market too long?
Unless there is something inherently wrong with the property or it has unique features that would only appeal to a specific buyer pool, more often than not, one of the major culprits is that the home was priced incorrectly and is deterring buyers who are unwilling to pay the price required. The longer the home sits on the market, buyers may wonder if something is wrong, even if there is not. A price adjustment may spark interest again as buyers see the home presented at a new price, but this may also create a situation where buyers are aware that competition is low and make an offer below the sellers expectations.
#3 Even though I’d accept lower, I want to list for higher to see if there are any takers. I would hate to leave money on the table.
Your beautiful home deserves to get nothing less than the highest market price, but a high list price is not the way to get it. Listing your home too high will deter buyers and when they run comps, it’ll show it’s overpriced and indicate that you may have unreasonable expectations and may not consider lower offers. Getting the highest price possible is a part of strategic negotiations during the offer process and your agent will use their skills in the art of negotiation to assess the situation and get you the highest price.
Pricing is one of the most important pieces in selling your home so I can’t stress enough how important it is to evaluate the data and build a strategy. Work with an agent who can effectively position your home and provide informed market knowledge for your neighborhood. My biggest piece of advice in this process is to make an educated decision but be as flexible and reasonable as you can. The market can shift quickly and an emotional decision won’t get you anywhere — a low offer isn’t meant to insult the home you’ve loved for years and a buyer may not value it as highly as you do so just be open to the process and accept an offer that feels fair. Don’t wait for the buyer willing to pay more because realistically, they may never come.