How to Price Your Home

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When you decide to sell your home one of the steps your real estate agent will go over with you is where you want to price your home.  When you are interviewing real estate agents this is a critical step to  help you decide, not only what to set the price at but, which agent you should choose.  This can be a make or break issue when it comes to selling your home. Listing your home for the wrong price can have a negative impact on not only your selling at all but attracting the right buyers to make an offer.

While interviewing real estate agents, they will go over a CMA or Comparative Market Analysis, showing you market conditions, comparable homes  and will make a recommendation on a listing price, that is right for your home. While the ultimate listing price is completely up to you, this information, if done by a qualified competent real estate agent, is suggested because of several factors and is what the market is expected to bear for your home.

You may find that the prices of some agents are not what you expected, they could be significantly lower than what you had in mind. These prices should be supported with market data, of not only sold homes but active listings, expired listings and homes under contract as well.

Another agent you interview could bring in pricing recommendations that are similar to yours or in some cases higher. For these recommendations to be an accurate depiction of what your home is worth, they should be supported by the same types of information, recent sales, expired listings and other nearby homes that are under contract.

Be cautious, because as the saying goes, If it seems to good to be true, it probably is. Some agents figure that it is easier to convince you that your home is worth more than it is, to get you to sign a listing contract with them, and then try to make changes later on and this will hurt your chances of selling your home in an appropriate time frame or even at all. Starting high and working down is not an effective sales strategy.

The Risk Of Pricing High

When your home is listed , the first couple weeks are typically the busiest time with marketing, showings and activity. Other agents will be looking at the new homes when they hit the market, researching  pricing and areas and working with their buyers to find the right home for them. This includes looking at pricing and making sure that the home they send them are priced right for the market and area.
Not pricing your home correctly right out of the gate will hamper this activity in s a couple ways.
  1. If it is priced to high, potential buyers may not even see your home for sale as it may be listed out of their price range.
  2. Buyers Agents know the market and value of homes so an over priced listing will be spotted right away.
  3. Over priced listings may not even be shown.
  4. They may be shown to buyers, but only as a reference point to other appropriately priced homes.
  5. Your home may sit on the market with no activity and could potentially lead people to believe their is an issue with the property.

Even if your property does get an offer and go under contract, it's not just they buyers that you have to agree on a price with. The lender will also do an appraisal and that may fall short of the agreed price, and the buyers won't be able to obtain financing.

Starting High And Working It Down

Take a moment of caution with agents who tell you that you can start a listing high and keep dropping the price later on. The longer your home sits on the market over priced, the more buyers you are missing out on because of it.  Most buyers today are financing homes, and this adds another layer of price approval on every home sale. When the buyers agree on a price for the property, the lender will have an appraisal done, to ensure that the asking price is the value of the home. When this process is completed if the appraisal does not come in at or above the purchase price, the buyer will not be able to obtain financing and will have to walk away from the sale if the price is not lowered to the appraised value.

This not only adds time to a purchase if it does go though, but also prolongs the amount of time that a home is on the market. and putting a he back on the market after it is under contract raises more questions for future buyers and they will want to know why that happened, or worse case assume it was because of an issue with the home.

Sometimes, even a well-intentioned, agent can feel the emotional pressure a homeowner can put out there, especially if they have an inflated perception of their home's true value. Unfortunately, some agents use this as a sales tactic to "buy-listings". This only hurts the homeowners in the long run. If you interview several agents and one seems to be priced way out of the ballpark  from the others, make sure they can justify this with recent data, and don't hesitate to ask why they are priced so much different than the others.

When you are selling your home it can be an emotional experience, and to have someone tell you it may not be worth what you thought it was can be tough to hear. But, you want an agent that will tell you the truth, not matter what that is not someone who will fluff things up to make you feel good.

Benefits to pricing your home right:

  1. More Showings
  2. Greater chance of getting an offer
  3. Shorter Listing times
  4. Attracting serious buyers , not lookers
  5. Smoother selling process
  6. Achieve your goals faster and easier
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