In this blog, I’d like to offer you some time-tested guidelines for pricing your home to sell in a buyer’s market, so let’s get right to it.
Guideline 1: Adopt an Objective Attitude
This is hard for many homeowners to do since they’ve invested so much of their personal lives in their properties. But, the best way to approach any market is to look at it as if you’re selling a commodity. This helps you make clear-headed decisions in terms of the price to set and the price to accept.
Guideline 2: Realize That All Housing Markets Are Local.
What does the statement “all housing markets are local” mean? It means that while the price of houses in one area or neighborhood may have dropped, they may have stabilized or even risen in another region.
In other words, different conditions produce different results in terms of home prices. So, the first thing you need to do is to educate yourself on your area, either by yourself or with the help of a real estate agent.
One way this is done is through “comparables;” that is, comparing the prices and sales of homes for an area. Typically, you look at prices and sales for one year ago, six months ago, three months ago, and for the current situation. Tip: The most recent sales (ones that closed within the last three months) will be the most informative.
Once you have this information, then ask yourself questions similar to the following:
• What trends do I see?
• Are prices going up or down and by how much?
• How many days are homes staying on the market? (If they’re staying long on the market, then they’re not selling well; the opposite is true with fewer days on the market.)
• How much of the days on market is due to seasonal activity?
Once you find the average price of homes within your area, then your sales price will likely have to be within that range. This is because there’s a basic fact in the real estate market – the market sets the price, not the homeowner.
Guideline 3: Analyze Your Competition!
By competition, I mean your neighbor’s homes that are for sale. They may have an asking price that’s not worth what you feel your home should be priced for – meaning you’d like to price higher. But, if that neighbor’s price is already too high for the market, then you both end up with homes that won’t sell. Again, price realistically for the current market conditions!
Guideline 4: Put Your Realtor to Work!
By this I mean you should ask your listing agent to do his or her own analysis. Ask them to call the listing agents of properties similar to yours to find out what kinds of showing activity they’re getting. Your realtor should be able to get answers to questions like, “Have they had offers? If so, how many? If offers were made, why weren't they accepted? Was the price too high?”, etc. This information can give you a good idea of an asking price to set for your home.
Guideline 5: Don’t Significantly Overprice Your Home!
There’s always the temptation to set a high price, hoping to get the maximum amount from your home. You know you’ve overpriced when the following happens: Your home gets a lot showing activity when it’s first placed on the market, but you receive no offers. Remember: buyers are shrewd and know when a home is priced far beyond its actual market value.
If this happens, then the best strategy is lower the price to the market value quickly so your listing is still in the front of buyers’ minds.
Guideline 6: Don’t Significantly Underprice Your Home!
This may sound like pretty obvious advice, but, under certain circumstances, homeowners are willing to do that. The problem is that this strategy creates the wrong perception in the marketplace. Buyers see the price as indicating that your home isn’t a great value. Plus, you receive a lot of “low ball” offers and may end up getting a price far below what you deserve.
Guideline 7: Position Your Price Correctly to Get Maximum Viewings on the MLS!
The MLS is the “Multiple Listing Service” on which realtors list your home. Naturally, you want your price to attract as many buyers possible, and most of those buyers narrow their searches by price range.
So, while at first glance, slightly raising up the price of your house to get more money seems like a good idea, it really isn’t for this reason: it may move you out of a buyer's price limit, and your listing is suddenly missing from an entire viewer segment!
Let's say, for example, you set a price of $200,000. Buyers searching up to $200,000 won’t see your listing. But, when you lower your price to $199,900, suddenly they will.
Hey, I’ve got many more guidelines to share with you and not enough space in which to put them! So, for more information, call me today. I’d love to share my knowledge with you and, most of all, help you sell your home! I look forward to talking with you!
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