Pricing Your Home To Sell
Every home owner wants the best possible price and best terms when selling their home. Several factors, including market conditions and interest rates, will determine how much you can get for your home.
What is your home worth?
All homes have a price, and sometimes more than one. There's the price owners would like to get, the value buyers would like to offer and a point of agreement that can result in a sale.
In considering home values, several factors need to be considered:
• LOCATION - The value of your home relates to local sale prices. The same home, located elsewhere, would likely have a different value.
• DEMAND - Sale prices are a product of supply and demand.
• LOCAL CONDITIONS - All transactions are unique, creating flexibility in the marketplace. The amount of flexibility depends on local conditions.
• MOTIVATION - Owner needs can impact sale values. If owner Smith "must" sell quickly, he will have less leverage in the marketplace.
• OWNER NEEDS - Sale prices are not based on what owners "need." When an owner says, "I must sell for $300,000 because I need $100,000 in cash to buy my next home," buyers are not going to make an offer if similar homes in the area are selling for $250,000.
• NET PRICE - Which would you rather have: A sale price of $250,000, or a sale price of $255,000 but where you agree to make a "seller contribution" of $5,000 to offset the buyer's closing costs, pay a $2,000 allowance for repairs? Sale prices are not the whole deal.
Analyzing all these factors can be confusing to the average buyer.
Who can help?
Experienced REALTORS® that are active in the local marketplace can provide analysis and insight related to pricing, marketing, negotiation and closing. Experienced REALTORS® have handled many transactions, and can apply this knowledge and their judgement to develop a Competitive Market Analysis with a range of potential value for your home.
Once you know the range of your home’s value, you must select a pricing strategy that you feel most comfortable with. This will depend on how fast you want sell your home, how much you’re willing to negotiate the list price, and whether it’s a buyer or seller’s market.
Pricing Strategies
Here are three common listing price strategies, from high to low:
1. Pricing Above the Market Value – Many sellers choose a higher than market value price, hoping to make the most amount of money. They figure that buyers are going to want to negotiate, and build in a cushion so that they will land at the market value. The problem with this strategy is that overpriced homes turn away buyers and usually just get ignored. Buyers don’t buy overpriced properties. Sellers who overprice their homes even just 10% above market value, then reduce the price one or more times often end up getting less than they would have if they’d priced it realistically from the start.
2. Pricing at Market Value – Properly pricing your property will mean that you will have the possibility of many more buyers competing for your property. The right price is usually within 5% of market value and usually results in a fair-dollar sale within a reasonable amount of time – Price Sells!
3. Pricing below the market - A lower list price can drive more activity and buyers to your property and may cause competition in offers. Buyers are always looking for a deal and will be more likely to visit your home and fall in love if it seems like a great value.
Source: NAR Move Sales Inc.
The Take Away
Home selling is a process that is part science, part marketing, part negotiation and part art. In this process, you may need to rethink your strategy after having it on the market for a couple of weeks. Be flexible and react to changing market conditions to get the best price for your home. All transactions are different, and because of this, you should do as much as possible to prepare your home for sale and engage the REALTOR® you feel is best able to sell your home.
Ready to sell your home, or just want to know more about the home selling process? We’d love to help. Contact us anytime. No pressure, no pushy sales talk. Just the answers you need.
