Pricing your home is the most critically important step when it comes to selling your home. Price it too high, and the best marketing strategy by the best agent in the world won’t help sell the home. So…
“How do I know my home is priced correctly?”
The first thing you need to do is understand how the markets works and what type of market you are selling in. In order to do this we look at a few things.
- How is the inventory?
- Inventory is basically the number of homes currently on the market in your area. One key thing to look at is the Absorption Rate in your area. The Absorption Rate is a calculated formula that shows the rate at which homes are being sold. If there were no more homes listed in your city, how long would it take to sell everything currently on the market? When tracked over the course of several months, you can see if this number is going down(good for sellers) or going up(good for buyers).
- What have other COMPARABLE homes SOLD for in the last few months?
- Don’t look at what homes are currently priced at, because these are homes that have not received offers yet. And don’t look at recently sold homes that are nothing like your home. Sure that house two streets over got $50k more than what I am telling you to price your home at. But it also has a brand new roof, windows, kitchen, HVAC and has an extra bedroom and bathroom. Only look at similar homes and their final sale price!
If inventory is low and home prices have been steady or rising slightly, you can be a bit more aggressive when pricing your home, but going over the market value will only have a negative impact on the sale of your home.
“But my home is nicer than those other homes!”
No it is not. Too often, when sellers try to sell by themselves, they price it too high because they price based more on emotions than market value. That’s why having an experienced, knowledgeable Real Estate professional is key. If you interview multiple agents and most are giving you the same price point but there is one that gives a much higher figure, odds are that agent is desperate for business and will tell you whatever they think you want to hear just to get the listing. Then they will come back to you begging for price reductions after the home has sat on the market for weeks/months without an offer and with minimal showings.
“Let’s price it higher so we can have some room to negotiate!”
- If you price yourself above the market, many buyers won’t even look at your home. Home buyers typically set a price ceiling when searching for a home. If your home should be priced at $200,000 or below and you decide to price it at $215,000, any buyer looking at $200k and below will not even see your listing in their search.
- You may get some showings, but you will not receive any offers. After your home has sat on the market for a month or more, you may decide to lower the price a little, but once a home sits on the market for an extended period of time, it can develop a stigma. People will wonder why it hasn’t sold and may think there is something wrong with it. By the time you decide to lower the price enough to the point it should have been at the start, buyers will see you as being desperate to sell and may start submitting lowball offers. Price it right from the start and you won’t have to worry about that.
“But Zillow says my home is worth….!”
Stop right there. First off, the name “Zestimate” is just stupid. Second, the data that Zillow collects such as square footage, lot size, # of bedrooms and bathrooms, is not always accurate. That should be a huge red flag right there. Zillow also does not take into account that values can vary from street to street and a neighborhood on one side a main road or highway, may be of a higher value than the neighborhood on the other side. Please do not take their numbers to be a true indicator of value. You can use them to get a general idea, but unless ZIllow actually comes into your home and gathers relevant information, an experienced Realtor will always be able to give you a better idea of what your home should be worth.
“But it sold in 2 days! Did we price it too low?”
Congrats! If your home sold in a matter of days, odds are it sold close to, or above asking price. That is a good thing, isn’t it? Pricing with the market is a science that most great Realtors have learned. Add in a great marketing strategy and this will almost always yield a quick sale. Be happy that you don’t have to worry about your home sitting on the market for months and dealing with the inconvenience that selling a home can bring.
If you’re ready for an amazing listing experience, reach out today for a free consultation