3 Tips to Price Your Home Correctly
The current state of the real estate market is that it is still a heavy seller’s market, but it’s not as crazy as before. Even though sellers have a lot more power than buyers, they can’t just toss their home on the market for any price they want anymore. As the market cools off, it is more important than ever to price your home correctly. Here are the three ways your agent can help you price your home to sell for the most money in the shortest time possible.
The first part of determining how to price your home is to pull the property information. Buyers care about beds, baths, square footage, lot size, school district, etc. In addition to that, look at the finishes and amenities of the house, as well as any upgrades the current owners made. Make sure to have repair logs for roofs, electrical, plumbing, siding, and upgrades. Not only can these help increase the home’s value, but buyers and their agents will also be highly interested in this information.
Research comparable properties
Usually referred to as “comps”, these are properties of similar and nearby size, amenities, and location that sold recently. Closed properties are the best indicators of what the market was like that amount of time ago. Comps currently under contract are the best indicators of the current market trends. This is the number one way to determine how your home will be priced.
Pricing for maximum attention
When selling a home, agents must perform a three-part balancing act:
- Sellers want to make the most money possible on the sale (and potentially move quickly)
- Buyers want the best deal possible
- The seller’s agent wants to generate the maximum buyer interest in the property
How does the agent accomplish this? The more buyers who see the home on the MLS, the more of them will hopefully be interested enough to submit an offer. Multiple offers create a bidding war, which results in more money for the sellers. To accomplish this, an experienced agent won’t price the home at its market value, but rather just below it.
Let’s use a $520,000 home in a healthy seller’s market as an example.
If the agent prices the home above the market value at $540,000 to skip the anticipated bidding war and net the most money on the sale, it is likely to sit on the market until price reductions bring it down to the correct value. At that point, high days on market may be a deterrent to buyers who wonder “What’s wrong with that house to make it sit for so long?”
If the agent prices it too low at $490,000 to try and instigate a bidding war over the market value, seasoned buyers will often wonder “That home seems too nice for that price. What’s wrong with it?” If a deal seems too good to be true, it usually is. This will lead to higher days on market, too.
A savvy agent would likely price it between $500,000 and $510,000. This accomplishes multiple beneficial things.
- Buyers looking in the $500k range will see it as on the lower end of their range and get excited about saving some money.
- Buyers who see $500k as near the top will be interested because they will see it as an affordable way to trade up to the next price bracket.
- Multiple interested parties help to leverage bidding wars, which can quickly take the price above market value, which benefits the seller the most.
If you are curious about what your home is worth, get a free, no-obligation quote here.