4 Tips to Pricing Your Home
Top 4 Most Common Pricing Mistakes
When I took my first real estate class over 2 decades ago the teacher had said, "Over 80% of your marketing is pricing the home right." Well marketing and technology has changed alot since that day. However, that has made the statement even more true! Buyers can quickly look up recent sales in your neighborhood and get a market value for your home. Buyers can look up everything for sale in your neighborhood. If there is another similar home priced for a lot less then they won't even visit your home.
In studying the market and watching some homes sell and other sit on the market we have seen 4 common pricing mistakes.
1. Initial Start Price Is Too High
Today's home buyer is aware of everything on the market. Not only do the know all the facts and figures. But they have seen photos, video and virtual tours of your competition and recent sales. So if you are priced higher than the rest of the market then no one is going to come see your home. And it's not going to sell.
In fact studies have shown pricing too high at the beginning can cost you thousands of dollars. That is because you eventually will make a price adjustment but by that time your home will of developed a stigma of being on the market for too long. So you will end up selling your home below market value because of this stigma.
If you want to sell quickly and for the most money then price your home correctly. This will cause more activity on your home and possibly a bidding war which will net you more money.
2. Weird List Price
You see a lot of prices at $xxx,900. You know why? Well it feels like you are paying a lot less when in reality you are paying just a $100 less.
But in today's internet world it is not the greatest idea. Over 90% of buyers search for homes online. The home search criteria is all in round numbers. So if your home is priced at $549,900 and buyers puts in their search critiera $550,000 to $700,000 your home is not going to be seen!
Now if you are working with a Realtor then they will go a little off of what you stated your price range is. They know on the high side they may be able to negotiate down. And on the opposite side there may be a great deal that is priced just under your range. So a Realtor will find all the homes that might work for you.
But you should be aware how buyers search for homes on the internet and price accordingly.
3. Not Paying Attention to the Market
Pricing your home has a lot to do with whether it is a Buyer's Market or Seller's Market. Because this is an indication of whether prices are moving up or down.
First let's consider pricing in a Normal Market.
This is where all the homes on the market will sell within the next 6 months. Pricing in this market should be according to the recent sales in the market. After all, this is what appraisals will be based on. And in a normal market a buyer won't be paying over appraisal price. Also, your buyer won't be able to purchase a home that at a price above appraisal if they are getting a mortgage.
In a Seller's Market prices are appreciating. So you will see in the market homes selling just above the last homes that sold. So price your home based on what your current competition is priced ... while keeping an eye on the recent sales.
In a Buyer's Market prices are depreciating. The best way to sell in a true Buyer's Market is to price it ahead of the declining sales price. This way you are the next one to sell and sell closer to your list price. If not you can be sitting on the market and going through multiple price reductions. You usually end up selling a lot lower than if you had priced it right at the beginning.
4. Not Working the Deal
No matter the market your buyer is going to want to negotiate. Everyone wants to feel like they got some kind of deal.
Also there are some cultures that negotiating is the "norm".
So don't look at the first offer as an insult. Look at it as a buyer expressing interest in your home. Always respond. Especially if they have written you a personal letter and provide a market analysis showing why they made the offer in that fashion. This is a buyer who has invested time and effort into their offer. They are more serious buyers then someone just throwing a number out to see if you bite.
Sometimes the buyer is just fishing around for the best deal. Those you can cut loose. In order to get the best price for your home you want someone who falls in love with your home. Not someone just looking for a deal. But you don't know the buyer you are dealing with until you have gone through at least the first round of negotiations.
Ready to start looking at homes? Need to sell your home? Contact us to let us know how we can help.