Pricing a home for sale can sometimes be a tug of war between heart and head. You might come to an agent with a price in mind, but when you don't agree, there are several approaches to finding the right dollar amount for you and the market.
“Seriously consider that [your] home may be worth less than [you] think it is in today’s market. Understand, a listing agent has zero incentive to underprice a home; in fact, they typically earn more when a home sells at a higher price,” said Michelle Schwinghammer with West + Main Homes in Denver.
Look to hire an agent who is willing to work with you to reach a position where you’re comfortable. After all, it’s ultimately up to you to decide the sales price. That said, a healthy give-and-take will often yield a better result than hiring an agent who just tells you the price you want to hear.
“If you disagree with anything your agent is proposing, including price, speak up,” said Chris Howey, managing broker of Kentwood Real Estate in Denver. “Have a conversation about it and come to a resolution that you’re comfortable with, taking into account everything that you know about your home and your neighborhood, along with the agent’s expertise and guidance.”
Ask for documentation
Agents typically analyze many details about your home to create a proposed price range for it to be listed. Most review data on sales of comparable properties, called comps, and assess the condition of your home and its unique features to inform their decision. Many also factor in market trends, the home's location, school district and more. All of this data should be available to you to examine for yourself.
“Any reputable agent you’re talking with should be sharing neighborhood comps with you that support any price that he or she is recommending,” said Howey. “Remember, these comps should be apples to apples as much as possible, within 20% of the same square footage of your home, the same neighborhood, similar style, one- or two-story, finished or unfinished basement, etc.”
It's likely you did your own homework or used online tools to determine the asking price, but it takes more than that. The real estate market can turn in a week, but, ideally, comps should come from the last six months, agents say.
If you look at the Multiple Listing Service for information, be wary that numbers may not tell them whole story: A sold price may not include the contingencies and concessions that were part of the deal.
“I will sit down with all the comps I use. We’ll look at photos, we’ll look at square footage, and we’ll look at locations and rate the properties,” said Denver-based agent Amanda Snitker of Coldwell Banker Realty. “People usually get there.”
Tour other homes for sale
Consider attending open houses for homes in both your and your agent’s desired price range. Ask about the homes' conditions, then compare them with your own property. See how long the home has been on the market, too. If it's been a long time, that may be a sign that it is not priced correctly.
Perform upgrades to justify the value
To increase your home's list price, you could perform upgrades that add to the home's value. Identifying what can be done usually happens very early in the process, often during the initial appointment, Schwinghammer said.
"Oftentimes, some of the very best money a seller can invest are in items that are under the hood, destined to be discovered in an inspection and ultimately could decrease the seller's net price," she added.
Or worse, lead a buyer to walk away.Some upgrades to protect yourself from this would be to make roof repairs, replace systems like a water heater, and perform a sewer scope to identify needed repairs, said Schwinghammer.
Small changes that can make a home more attractive — such as fresh paint and landscaping — aren't likely to fill the gap between your desired list price and your agent's.
"I tend to recommend real upgrades for sellers who want to enjoy them for a few years before selling at all," said Schwinghammer.
Hire an independent appraiser
You can get a third-party opinion by hiring an independent appraiser, which costs $358 on average, according to Angi.com, a home improvement marketplace.
“It’s not something I generally recommend, but some people like to do that,” said Birmingham, Michigan-based agent Chris Pero with Max Broock Realtors. “Appraised value doesn’t necessarily mean that’s what you’re going to be able to sell it for either.”
Pero added that agents do not charge for their pricing opinion, and the appraiser's findings might not adjust the price in any way.
Test the market
The market will never lie. Whether or not a home is priced correctly can be determined within the first two weeks.
“I’ve never had a dispute, and I never would because, ultimately, the seller gets to choose the price; however, a seller also needs to understand that if a certain number of days or weeks go by without a second showing or serious interest, the price just might not be the best price,” said Minneapolis-based agent Ellyn Wolfenson with Coldwell Banker Realty.
Some agents accept their seller’s desired price under a special agreement: If it doesn’t sell after two weeks, they will drop the price. The market often understands a price change within that timeframe, Wolfenson said, but continued drops after that paint a different picture.
“What I think is a mistake is when you price a house and you start going down by the inch,” said Wolfenson. “When you start adjusting the price inch by inch, you glean a bunch of lookers. You attract a bunch of people who will keep waiting for you to do that.”
You could also miss out on the most-interested buyers in those first two weeks, said Covell. If you wait a month to drop the price, those motivated buyers might be under contract for another home.
Ask another agent
Some sellers will seek out other agents for their opinion. Your agent might take matters in their own hands and seek out colleagues and others back at the office for their input, said agent Holly Connors of @properties Christie’s International Real Estate in Arlington Heights, Illinois.