How to Strategically Price Your Home
The Harsh Truth
One of the harshest truths that sellers ignore is hearing from an agent that their home is “overpriced.” Overpriced homes tend to attract fewer buyers, are more unlikely to sell, and when they do sell, they tend to sell for far less than the asking price. If you want the most money for your property, it’s critical to hit the best, most accurate price before you list. Don’t think, “Oh, we can come down.” It doesn’t work that way. Once a home is on the market you have less than a month to get what you’re asking for. Buyers and agents are most likely to show interest in the first to the fourth week a home is listed. Interest begins to wane in the fifth and sixth weeks, and from the fifth week on, both buyers and sellers will think of your home as undesirable, stale, or worse, overpriced.
Six things you should do before pricing your home:
- Ask yourself why you’re selling. Do you want to sell, or need to sell? You may need to sell your existing home to be able to afford the next home you’re looking for. Or, maybe you found your dream home, and now your current home has become a drain on your finances. Either way, your reason for selling will impact your price.
- Try to be impartial about the price. We get it. It’s your first house. Your kids were born and grew up in that house. You remodeled half of it with your own two hands. There are a thousand and one emotional reasons and values you will confuse with the physical reasons and value of your home. Try to step back and see your house as another house, not as a “home.” There’s a difference. People buy houses and make them their homes. No one cares what you paid for it, or how much work you put into it. They care about what they’ll have to pay to buy it.
- Do your research in person, and online. Studying what has and hasn’t worked in your area or “market” will give an excellent baseline to let you strategically price, position, and even stage your property, so you get top dollar for it. Once you have a good baseline for what the property is worth, do anything you can that will help you boost your asking price. Sometimes $5,000 to $10,000 worth of remodels can add $15,000 to $30,000 to the asking price. You can find out a lot about the market by using Homes.com to do your online research. Going to open houses in your neighborhood to see homes like yours is also a fun way to do research. Make a list of all the features and things you want to check out, so each house is evaluated on the same criteria.
- Get a Comparative Market Analysis (CMA) report from a Realtor. A CMA is simply a report compiled from a Multiple Listings Service (MLS) database that gives you the details, photos, prices and information (number of bedrooms and bathrooms, etc.) of the homes similar to yours that are on the market in your area. CMA’s list properties that recently sold, or failed to sell. Realtors will typically give you a CMA because they want to represent you when you do decide to sell.
- Ask for an evaluation of your home. A home evaluation is free and is typically a “mini-CMA” a Realtor does to get a sense of your property. Most Realtors you invite to evaluate your home will examine its layout, quality, and maintenance. Will the carpets need cleaning or replacing? Does it need to be painted? How is the workmanship in it? Is it cheap construction or quality? They’ll look at anything related to its condition, including structure, layout, and roof. Some Realtors will do a more extensive inspection; others will do a quick look around to get an estimate of what the home may be worth. Either way, their experienced eye, and assessment will be very close to what you might consider listing the home for. They’ll tell you what you might want to consider upgrading or fixing to get the best price.
- Timing is everything. Don’t rush to market. Try to price your home when its market value and buyer interest are at their highest, which studies show is in May. Homes put on the market between May 15 and May 30 tend to sell 18 days sooner than at any other time of the year. It may be because of the flowers, the weather, the sunny days, or because people get married in the spring. But it’s something to consider.
Unless you have a great location and property that’s really in demand year-round, it’s also important to understand that a house is most likely to sell for what you’re asking (or more) within the first six weeks it is on the market. The top activity among potential buyers and their agents traditionally happens during the second to fourth weeks they’re on the market. Knowing that, take your time placing your home up for sale if you can. Do your research, schedule your upgrades and any repair or remodeling work, price it appropriately and accurately. Then shoot for a May market date. You’ll be glad you did.
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Happy house hunting!