When you decide to sell your
home, setting your asking
price is one of the most
important decisions you will ever
make. Depending on how a buyer
finds your home, price is often the first
thing he or she sees, and many homes
are discarded by prospective buyers as
not being in the appropriate price
range before these homes are given a
chance to be shown.
Your asking price is often your
home’s “first impression”, and if you
want to realize the most money you
can from your home’s sale, it is
imperative that you make a good first
impression.
Because this is not as easy as it
sounds, your pricing strategy should
not be taken lightly. Pricing too high
can be as costly to a home seller as
pricing too low. Taking a look at what
homes in your neighborhood have
sold for is only a small part of the
process, and this on it’s own is not
nearly enough to help you make the
best decision.
This report will help you understand
some important factors about
pricing strategy to help you not only
sell your home, but sell it for the price
you want.
Pricing Strategy
Starts with
Good Information
Before you can begin to know
what your home is worth, you
should do some research, bearing
in mind the following:
An analysis of what homes
have recently sold for in your
neighborhood is NOT enough
to help you properly price your
home.
A quick scan up and down the street
at the prices of homes that have
recently sold will give you a starting
point. However, this is not nearly
enough for you to base your entire
pricing strategy on. It is important
for you to understand how buyers
look for a home.
Think about how you conducted
your house hunting search to find the
home you are now thinking of selling.
You most likely did not confine
your search to a single neighborhood,
but perhaps different neighborhoods or
towns in order to find a home that best
matched your needs and desires.
The prospective buyers who will be
viewing your home, will conduct their
searches in a similar manner. That
means they will be comparing your
home to, for example, brand new
development homes, century homes,
10-20 year old homes, etc. They will
also consider locations such as homes
in established neighborhoods, the
middle of town, the suburbs or country
properties. Each home will have a
different look and feel and it’s quite
possible that a prospective buyer might
consider all of these variables in the
search for a home.
You can see, when you’re selling
your home, you’re not just competing
with the home around the corner, but
also with all homes in other areas
which have the same basic characteristics:
i.e. number of rooms, overall
living space, etc.
How Your Asking Price
Affects Your Selling Price
There are 4 common strategies that most
sellers use to price their homes. It is
unwise to assume that a higher asking
price will net you a higher selling price. In
fact, often this equation works in reverse if
you're not paying attention to what the market
is telling you. Bear this research in mind when
you set your asking price.
1. Clearly Overpriced:
Every seller wants to realize the most
amount of money they can for their home, and
real estate agents know this. If more than one
agent is competing for your listing, an easy
way to win the battle is to overinflate the
value of your home. This is done far too
often, with many homes that are priced 10-
20% over their true market value.
This is not in your best interest, because in
most cases the market won't be fooled. As a
result, your home could languish on the market
for months, leaving you with a couple of
important drawbacks:
• your home is likely to be labeled as a
"troubled" house by other agents, leading
to a lower than fair market price when an
offer is finally made
• you have been greatly inconvenienced
with having to constantly have your home
in "showing" condition . . . for nothing.
These homes often expire off the market,
forcing you to go through the listing
process all over again.
2. Somewhat Overpriced:
About 3/4 of the homes on the market are
5-10% overpriced. These homes will also sit
on the market longer than you want. There is
usually one of two factors at play here: either
you believe in your heart that your home is
really worth this much despite what the market
has indicated (afterall, there's a lot of emotion
caught up in this issue), OR you've left
some room for negotiating. Either way, this
strategy will cost you both in terms of time on
the market and ultimate price received
3. Priced Correctly at Market Value
Some sellers understand that real estate is
part of the capitalistic system of supply and
demand and will carefully and realistically
price their homes based on a thorough analysis
of other homes on the market. These competitively
priced homes usually sell within a
reasonable time-frame and very close to the
asking price.
4. Priced Below the Fair Market Value
Some sellers are motivated by a quick sale.
These homes attract multiple offers and sell
fast - usually in a few days - at, or above, the
asking price. Be cautious that the agent suggesting
this method is doing so with your best
interest in mind.
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