Home Pricing Strategies
Pricing a home is tricky business. There are multiple factors that go into pricing a house for sale and there a few ways you can go about it. As the seller you know how much you’ve put into your home in terms of dollars, creativity, strategy and sweat equity and you would like to see all of that reflected in the listing price. So what are the different pricing strategies?
There are several home pricing strategies you can employ when listing a house. You can price at the highest end of the market and wait for a cash buyer, hire an appraiser to give you the actual market value and price it right, sell during the spring or summer months for a quick sale at the highest price or even price under market value to garner attention away from other competing homes in the neighborhood.
Pricing it Right
What is a good price for a house?
The best asking price would be close to market value. As defined by Fannie Mae “Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgably and assuming the price is not affected by undue stimulus. “
When a home is priced at its true market value it should sell within the appropriate time for that market. The better question is how will you learn the accurate market value of your house? Algorithms are abuzz on the internet promising you the answer to “What’s your home worth”. Who has it right?
How do I know the market value of my home?
To narrow down the value of your home to the closest probable price it should bring in a competitive and open market you would need an in-depth study. A Pre-listing appraisal is a seller’s best friend. This could be the most effective tool behind your home pricing strategy. Beyond identifying the true market value of your house, the appraiser can explain updates and repairs required to compete in the market and the reasonable time it should take to sell.
Every Automated Valuation Model (AVM) algorithm out there online is too generic and can do little to pinpoint your home value. It’s built to work with mass data without accurately adjusting for specific factors that affect your home. Maybe by the time the Tesla autopilot can accurately drive itself in every possible scenario without any errors we may have an algorithm tuned to where it can accurately predict home values.
Pricing Below Market Value
How to price your house to sell fast?
iBuyers and investors are options for a quick sale and the pricing will be decided for you to either accept or reject. However, you will most likely lose a lot or maybe all your equity. A smarter strategy is to price it under market value and create a frenzy among buyers competing for your home.
When your home is priced below the competing homes in your neighborhood it will gain attention which can help steer potential buyers to your door. For similar watermelons on the shelf you would most likely purchase the least expensive one or at the least give it due consideration. This could speed up the process and likely help sell your home sooner rather than later. Read: How long does it take to sell a house?
Pricing at the High End of the Market
How to price your home to sell for top dollar?
Sellers are sometimes unwilling to sell unless they receive close to the dollar figure they have in mind. Often this is at the very high end or even outside the market range for that property.
That is certainly a homeowner’s prerogative. Yet realize that in this case you will not appeal to most of the buyers who require financing as the lender’s appraisal will reflect market value. But if the situation allows you to wait for a possible cash buyer who appreciates the unique characteristics or quality of your home then this is certainly an option.
The Right Team
Hiring the right team can make all the difference in capitalizing on the sale of your home. Work with a team of Real Estate professionals who can successfully guide you through the prepping, staging, cleaning, pricing, marketing, negotiating and closing processes. Read: 5 Killer Secrets to Selling Your Home at the Highest Price.
An Alternate Strategy
There is an alternate strategy to price at the higher end if that is your decision. To do this, start with a pre-listing appraisal. Consider the adjusted values of the comparable sales utilized in the appraisal. The appraiser utilizes recent sales in the neighborhood which are similar to your home and makes adjustments for differences to make them equal to your home. After adjustments to these sales there is typically a range of value. While the appraiser will select a final value by giving most weight to the comparable that is most like yours, the range can be informative and given consideration. By employing this methodology your pricing remains reasonable for the market and your home will appeal to most buyers and can pass a lenders appraisal.
Time it Right
How can I sell my house fast for top dollar?
Timing can make for an excellent home pricing strategy. Every sellers dream is to sell their home fast for the highest possible price. Residential real estate is a seasonal business with spring and summer being the hottest time to sell a house. Use the winter months to prep your home and then price it right and there may be very little else required to sell your house quickly and for maximum returns.
To stay competitive update the landscaping, take care of any maintenance issues that could impact a buyer’s decision and consider having the home staged. A knowledgeable realtor should be able to guide you through the process of prepping your home for sale.
How much do you pay to sell a house?
There are costs associated with selling a home and this will affect your bottom line. From Realtor fees, repairs, photography, staging, cleaning, surveys, inspection repairs, home warranty and closing costs. This could add up to about 10% of the home price.
Most of these costs are part of the necessary price of doing business. However, some are optional. If you’re looking to save a little dough, consider tackling some items yourself. Read: 30 DIY Home Staging Tips.
The Best Home Pricing Strategy
The best strategy is the one that will work best for you. Discuss the various home pricing strategies with your agent to effectively decide on which option best suits your needs. A knowledgeable Realtor can advice you on current market conditions. Whether you’re in a buyers’ market or sellers’ market will have an impact on your home pricing strategy. If your home is priced too high and requires a price cut, make it swift and significant. When a listing sits on the shelf too long it can become questionable to buyers or you may time yourself out of a selling season. Your agent should be the voice of reason and keep you informed of changes in the market.