Depending on how a buyer is made aware of your home, price is often the first thing they see. As a result, many homes may not be shown because they are discarded by prospective buyers for not being in the appropriate price range.
When you decide to sell your home, setting your asking price is one of the most important decisions you will ever make. 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 it 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 step on its own is not nearly enough to help you make the best decision. I will try to help you understand some important factors about pricing strategy that will help you not only sell your home, but help you sell it for the price you want.
First, pricing strategy starts with good information.
For sellers, before you can begin to know what your home is worth, you should do some research, bearing in mind that 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 reference point 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. It means they will be comparing your home to, for example, brand-new development homes and homes more than 20 years old, etc.
They will also consider locations, such as homes in established neighborhoods, in the middle of town, in the suburbs or in country estate 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 that 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., the number of rooms, overall living space, etc.
For buyers, for you to understand how much to offer for a home you’re interested in, it’s important for you to know how sellers price their homes. Here are four common strategies you’ll start to recognize when you begin to view homes.
When a home is clearly overpriced.
Every seller wants to realize the most amount of money they can for their home, and real estate agents know this fact. If more than one agent is competing for your listing, an easy way to win the battle is to over-inflate the value of your home. It is done far too often, with many homes that are priced 10- 20 percent over their true market value. This strategy is not in their best interest, because in most cases the market won’t be fooled. As a result, the home could languish on the market for months, leaving sellers 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.
When a home is somewhat overpriced.
About three-quarters of the homes on the market are 5-10 percent overpriced. These homes will also sit on the market longer than they should. 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 – after all, 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.
A home 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.
A home 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.
Call us today, (951) 296-8887 and get the information you need enabling you to make an informed, educated sound decision. Questions regarding available inventory and/or other real estate matters please contact, [email protected]. Mike Mason, Realtor® & Broker/Owner of MASON Real Estate. LIC: 01483044, Temecula Valley resident for 30+ years, Board of Director (since 2011) Southwest Riverside County Association of Realtors® (SRCAR).