The First Price You Put on your Home should be the Best Price.
If you’re thinking about putting your home on the market, especially if you live in an area where prices are appreciating and the market is competitive, you may be tempted to list at a high price just to see what you can get for it.
Our recommendation is “Don’t do it.”
An experienced Real Estate Agent will tell you that pricing your home appropriately from the beginning is the most important first step to getting it sold quickly and at the best price. Research indicates that overpricing your home at the beginning and then dropping the price many times while it languishes on the market usually leads to selling it at a much lower price than where you should have priced it at the beginning of your listing. The longer a home sits on the market, you’re more likely to see a deeper discount off the original price.
A good Real Estate Agent knows the quicker the home sells the closer the offer will be to the original asking price. In many markets a home that is sold within the first few weeks of it being listed will often sell within 2%-3% of its listing price. As compared to homes that sell 4 -6 months from original listing date can sell for 9-11% below the original asking price.
How to price your home correctly
Many sellers want to set their listing or selling price based on what they paid for their home or the balance of their mortgage. Some base their decision on the profit they want to make so they can determine what they can afford on a new home. The reality is, your home is only worth only what the market will bear. If you price your home too high, some potential buyers won’t want to look at it at all, while others will simply walk away without making an offer.
If you’re in the process of interviewing several Realtors to choose a listing agent, you may be tempted to pick the listing agent who suggests the highest price for your property. But sellers, like buyers, need to careful of this decision as many real estate agents will often give buyers a higher proposed value just to gain the listing. The Real Estate Agent who provides the best (CMA) comparative market analysis and explanation of how your home should be priced will be more likely to sell your home quicker and for a much higher price than someone who tells you only what you want to hear.
A comparative market analysis should include sales prices for similar nearby homes that sold in the last month or two. It is an approach similar to what is used by an appraiser. In some cases if recent comparative sales are unavailable a listing agent may look further back than a few months. In addition, many Real Estate Agents include prices for homes currently on the market that will be your competition, as well as homes taken off the market because they didn’t sell. Other important facts agents can use to suggest a price range include how many days homes were on the market at various price points and the average difference between the list prices and sale prices on homes that have sold.
Your Real Estate Agent can help you estimate who might want to buy your house and what else those buyers are looking at so you can measure your price against the competition.
In addition a good agent might suggest taking you to see some of these other homes you will be competing against. These kinds of visits allow you to see what types of features make your home different and how you should price your home in comparison.
A knowledgeable Realtor can factor in all of these issues in the context of your local market conditions, including whether home prices are rising or falling and whether it’s a buyer’s or seller’s market.
Choose the right professional to help you with your home sale and then listen to your Real Estate Agents advice and your transaction is more likely to go through more quickly and at a higher price.