Setting the right price is critical to a successful sale. There are many things we can do to help ensure the successful sale of your home–such as sprucing up its appearance and marketing it aggressively–but the single most important thing is choosing the right price. The best, most reliable way of choosing the right list price for your home is by comparing it to similar properties in the neighborhood. How much are comparable properties currently listed for? How much did comparable properties recently sell for? How are these properties different than yours? Are prices rising or falling? These questions will guide us to the best possible list price for your home: a price that is as high as possible but low enough to generate interest and lead to a quick sale.
The Market Value
In a perfect world, the sale price of your property would be enough to achieve whatever financial goals you have in mind. In reality, the value of your property is determined exclusively by the amount buyers are willing to pay.
Often the hardest part of pricing your home is disregarding your emotional attachment. Remember that buyers are only interested in the bricks and mortar of the property–and the price you choose to list it at.
This graph illustrates the importance of pricing correctly. The centerline represents the true market value of a property. As you move above this market value, you attract far fewer prospective buyers, greatly reducing your chances of a sale. Conversely, as you move below market value, you attract a much larger number of potential buyers.
Activity vs. Timing
A common question home buyers ask is, “how long has this home been on the market?” Though the question may sound innocent, the answer can have serious consequences for the sale of your property.
When a seller first lists their property, there’s no denying they are in the driver’s seat. A new listing creates a flurry of interest as buyers scramble to be the first to view it–and potentially make an offer. With each passing day, however, interest wanes and sellers quickly learn that “days on market” dictates who holds the cards.
As time passes, potential buyers become more suspicious of why the property hasn’t yet sold … leading them to wonder if there is something other buyers know that they don’t.
And while issues with the home itself may sometimes be the reason for it not selling, it usually comes down to overpricing.
To keep your days on market short, it’s important to price your property competitively from the outset and do everything you can to promote your property during its first two weeks on the market.
Effects of Overpricing
Pricing your property too high all but guarantees it will take longer to sell–sometimes much longer. Instead of selling your property in just a few weeks, you could have to go through months of showings and open houses.
Even worse: statistics show that the longer a property is on the market, the less it sells for in the end. In fact, it will usually sell for less than what it would have fetched with a more realistic starting price.
• Put your best foot forward immediately
• Establish a competitive asking price
• Keep your home in top showing condition
• Offer favorable financing terms
The Pitfalls of Overpricing
Overpricing your house in the belief you can reduce the price later is a strategy that can backfire badly.
By the time you reduce your price, the initial surge of interest in your property may have passed. Also, if the price is lowered, buyers may wonder if there’s something wrong with the property that kept other buyers away.
To avoid selling your property below market value and wasting valuable time, be careful not to overprice your home.
