Determining Your Selling Price
At what price, should a home be priced?
A home should be priced at its market value.
Market value may not necessarily mean:
- The price you paid for the home
- The price you paid for the home + any capital improvements you made ($)
- What one person might pay
Market value is the value of the home based upon what other comparative homes in that market are selling for during that time of year.
How do you determine market value?
To determine the appropriate market value of your home, you should have a competitive market analysis completed. This analysis will look at comparative homes in your area that were on the market – the listing price, how long it was on the market, any expiration and/or re-listing dates, if it sold and at what price. Other factors that will be considered include timing of year and other influencing market variables (such as local economy, vacancy rates, etc.). A realtor will be able to conduct this analysis; they have access to this information in your area.
Benefits of pricing right
The strongest benefit of pricing your home accurately is that you will be able to sell it relatively quickly and with much less hassle.
Problems with pricing too high
Ultimately, pricing your house too high may result in being on the market for a long time and possibly a lost sale.
The higher the price above realistic market value, the fewer the buyers willing to consider your property.
In addition, it will take more time to sell if the price is too high.
Lastly, if the home is priced higher than the appraised value, it will create difficulty for the buyer to obtain financing.
Common mistakes
Mistake #1: Many sellers think that they can start high and drop the price later if it doesn’t sell.
However, this still presents problems. A property generates the most interest within the real estate community when it first goes on the market. Starting too high and dropping the price later misses the excitement and fails to generate as much activity. After you lower the price, these buyers may no longer be in the market, they may overlook your property since they have already seen it, or they may think something is wrong with the home since the price has been lowered.
Mistake #2: You should never chose a realtor based on the highest listing price provided.
In many cases, a higher listing price doesn’t reflect the market value of the home and you may face the problems noted previously. A realtor has no control over the market value of your home. What they can offer and should be selected upon is sound advice, experience, and excellent service.
