Pricing a listing correctly is a little bit art, a little bit science, and mostly based on a whole lot of data. Before you pick a price for your house, consider the following pieces of advice:
- Don't Set the Price Too High. I have had (many) clients say to me, 'Price it high so I have some wiggle room on the negotiations.' While I understand where you are coming from, I never recommend starting high...it almost always results in feedback that your house is priced too high. This is a sure way to have your house languish on the market for a few weeks (buyers will wait to see if you do a price reduction) and ultimately get an offer lower than what you would have gotten if it was priced correctly at the beginning. Not to mention the stress of getting your house ready and waiting for buyers who don't show up...
- "Did I price it too low?" When I price a house and it quickly goes under contract, my clients sometimes fear that their asking price was too low. I contend that a house that is priced properly, in very good condition and staged to appeal to a broad number of clients, should sell quickly. That doesn't mean it was priced wrong--it means it was priced right!
- What did Sally Sue Get For Her House? The days of finding out what the house down the street sold for and tacking $5,000-$25,000 on the price to set your asking price are over. If you list your home for more than the most recent comparable (house that sold), you better be able to explain why. Appraisers are being very particular and are not going to bring you an adequate appraisal unless it can be justified on paper. Not getting an adequate appraisal can result in the re-negotiation of the sales price or, even worse, your buyer can just walk away if they have an appraisal contingency.
- Do not 'back in' to your price. I have had people tell me that they need a certain amount of money out of their house. That's great. It has no bearing on what buyers are willing to pay for your home. Stop worrying about what you want and start thinking about what you can get. The market will bear what the market will bear--regardless of your situation.
- Too Much Information and Not Enough Facts. Zillow, Trulia, Realtor.com and all of the other sites out there are great resources. No individual site should be used to create a valuation of your property. It doesn't matter to you what other homes are listed for. You care about what other comparable homes have sold for, recently, and if there were any seller concessions given (closing costs, repairs, etc.). Comparables are based on Sales not on Active Listings.
- Sometimes The Market Is Changing Quickly and You Must Adjust: If you pick a price and you do not see steady traffic, you have priced your home too high. It happens. A quick adjustment will show buyers that you are serious about selling. Your Realtor can advise you what amount of traffic is appropriate in your area in your price range. Specialty properties will see fewer buyers and mid-priced homes will see the most. If you are not getting a reasonable amount of traffic for your type of home, it is almost certain that your home is overpriced.
- Stop worrying about what your neighbors will think and price your home to sell. It is not a great feeling to know that you have the most recent comp in the neighborhood and it is low. Remember, it is not your fault that the real estate market is experiencing a downturn.
Follow-up with Realtors and Buyers who have seen your home. Have your Realtor do this if you have listed it through a Broker; you will get the most honest feedback that way. Once you have the feedback, Listen To The Themes That You Are Hearing. If you hear more than once that your home is priced too high, or if you have the condition mentioned by a buyer or two, you are beginning to see a theme. If you ignore what you hear, you will realize less money in the long run. This is not the time to bury your head in the sand or stand firm on your price (if the evidence points toward the need for a price adjustment).
Despite all that goes in to pricing a property, there are times when only a price modification will make it sell. Don't be shy about agressively lowering your price; every home has a price point at which it will quickly get a contract. Again, keep an eye on the traffic--you should see an appropriate number of buyers coming through your home. If you don't, you must adjust your price to optimize your profit. Price adjustments can signal buyers that you are a serious seller who is willing to make changes to get to market price.
By being honest with yourself about your home's value and listening to the pulse of the market, you should be able to arrive at a price for your home that will be competitive and will allow it to sell quickly.