Pricing Your Home

Pricing your home is both an art and a science. Achieving the optimal price is the result of both objective research into comparable properties and a gut feeling about your property and the current market.

The right price should:

• Attract buyers
• Allow you to earn the most money possible
• Help you sell as quickly as possible

The simple fact is, price is the number one factor that most homebuyers use to determine which homes they want to view. And it’s important to remember that, although the price is set by you, the value of the home is determined by the buyer. Try to avoid allowing your enthusiasm to impact your better judgment – overpricing is a common mistake that can cost you in the end.

The Importance of Proper Pricing

• Faster sale and less inconvenience
• Exposure to more buyers
• Increases Realtors® response
• Generates more advertising/sign calls
• Attracts higher offers
• Means more money to seller
• Avoids being “shopworn”

What really matters is how your home stacks up against the others currently offered for sale and recently sold in your neighborhood. Buyers will be comparing.

Common Reasons for Overpricing

• Over-improvement
• Need
• Purchasing in higher-priced area
• Original purchase price too high
• Lack of factual data
• Bargaining room
• Move isn’t necessary
• Assessed value
• Emotional attachment
• Opinion of family and neighbors

Dangers of Overpricing

• Most of the activity in your home will occur in the first few weeks. Pricing a home properly and then creating immediate urgency in the minds of agents and buyers is critical.
• Buyers who have seen the most available homes in their price range are waiting for the “right house” to come on the market. That’s why if a house is priced right, it will sell quickly. The buyers are there waiting for it.
• Don’t start with a high price and the assumption that you can reduce it later. By the time you decide to lower the price, it may be too late, as interest will have already waned.
• A major cause for concern is appraisal problems; overpricing can lead to loan rejections and lost time.
• Even if your home is nicer than other homes in the same area, your house won’t be picked for viewing if you set the price too high.
• Buyers and agents become aware of the long exposure period and often are hesitant to make an offer because they fear something is wrong with the property.
• Attracting the wrong buyers.
• Fewer potentially qualified buyers will respond.
• You might help sell similar homes that are priced low.
• You could lose money as a result of making extra mortgage payments while incurring taxes, insurance and unplanned maintenance costs.

The Role of a Real Estate Agent in Pricing

• Provide you with a comparative market analysis (CMA), a comparison of the prices of recently sold homes that are similar in terms of location, style, and amenities. A CMA is performed by comparing previously sold homes in the area, and currently active homes to know your competition.
• There is no “exact price” for real estate
• We don’t tell you what we think your home is “worth”.
• The market determines value…together we determine the price.
• You determine the price based on the factors you control:
      – Marketing time
      – Financing alternatives provided
      – Condition
      – Exposure method
• Keep in touch with market trends and keep up to date with market activity of comparable homes.
• Estimate your net proceeds.
• Help to determine offering incentives.

Adding Value

Which items will add value to your home and help with resale when the time comes to sell?

The answer is: “Only the ones that future buyers will also want and be willing to pay for.”

As a general rule, choosing the functional over the merely cosmetic and choosing neutral over unusual or exotic will pay at resale. Taste and current trends can also affect the value of an update. Unusual colors have a limited appeal.

Which updates will add the most value to your home?

• Update your kitchen and/or bathrooms. Whether you need a minor or major remodel, updating the kitchen or bathrooms in your home will yield a high return on investment. Stay timeless with your updates, but also pay attention to trends. 

• Increase usable space. Add an extra bathroom, upgrade or expand your kitchen and/or master bedroom suite, add more closet space, or convert an unused space to a more functional space, like a spare bedroom to a home office or basement into the ultimate hangout space.

• Lighten and brighten your rooms. Paint rooms white or with a light color paint to neutralize your space. Add skylights, windows, or French doors.

• Revamp the exterior. Updated landscaping will draw in buyers before they even walk through the door. Keep your shrubs, trees, and grass trimmed and tidy. Add a splash of color with vibrant plants or paint the front door an eye-catching color. Consider a focal point like a flagstone walkway or a water feature.