Price To Sell.  Selling a home is one of the largest financial transactions we perform in our lifetime.  Owning a home is an investment and as such, we want to ensure we maximize our return when it is time to sell.  When you are finished reading this section, you will have a better understanding of market value, avoiding pitfalls, and establishing a price that is both competitive with the market while returning the highest value for your property.

Determine Your Home’s True Market Value

You might think you know what the best price is for your home, but in a slow or shifting market, price points vary. Before setting a price, you should:

• Study recent home sales in your neighborhood
• Consider the condition of your home
• Stay up to date on real estate news
• Get a second opinion from a agent

Since overly-inflated pricing is one of the top reasons homes fail to sell, it’s important to be realistic about the price within the current market conditions.  Let’s look more closely to what the market value is and is not.

The Market Value Of Your Home Is Not:

• What you have in it
• ‘What you need to get out of it
• What it is appraised for
• What you heard your neighbor’s house sold for
• What the tax office says it is worth
• Based on memories or treasures
• Based on the price of homes where you are moving

The Market Value Of Your Home Is Based On:

• Today’s market
• Today’s competition
• Today’s financing
• Today’s economic conditions
• The buyer’s perception of the property condition
• Location
• Normal market time

As A Seller You Control:

• The price you ask
• Condition of the property
• Access to the property

As A Seller You Do Not Control:

• Market condition
• The motivation of the competition
• Buyer’s perception of value

 Setting A Sales Price. Generally, as a seller, your primary goal is to sell your home as quickly as possible and at the best price.  However, a significant factor in making a quick sale is ensuring your house is appropriately priced for the market.  As the homeowner, it’s easy to think you know what your home is worth, but there’s likely a bit of subjectivity that goes into your estimate.

The illustration below shows the variation between minimum and maximum price with what is considered average based on performing a comparative market analysis for similar homes.

 Activity Vs. Timing.  The first few weeks of a listing brings the highest visibility.  Therefore, starting with a price established on market value will potentially net more buyers and in many cases, multiple offers.

The illustration below shows the activity rapidly increase as a new listing hits the market.  After week two, there is a rapid decline in activity and levels off around week three and from there, gradually reduces. 

The Effects of Over Pricing.  The higher you are listed over the market value, generally the longer your home will sit out on the market.  This is a common mistake made by sellers selling their own property.  The thought process is to start high and see what offers come in.  In effect, you are actually hurting your chances of selling your home for top dollar.  Why you may ask?  Simply put, the high price does not yield perspective buyers and when the seller lowers the price, it sets a precedence that it can be lowered further.     

The illustration below says the longer the house is on the market, the lower the selling price is to the original asking price of the home.  

The Importance Of Pricing.  Setting a list price for your home at market value will return approximately 60% of your buyer pool.  The higher you go, so does the pool of buyers.  A solid strategy developing a price is to list at or just below market value to gain the highest return of buyers at a price point that is competitive to the market and will deliver you the best offer.  Remember, more buyers equals a higher opportunity to receive multiple offers.  Sellers win in multiple offer situations!  

As you can see from the pyramid illustration, as price goes above market value, so does the decrease in percentage of buyers.

How To Evaluate Market Response To Your Listing:  Now that we have covered listing your home at market value, let’s look to see how we measure the response to the listed home price.  This is important, regardless  of the research you have done up fron to establish best price as today’s market is changing at record speeds.  In fact, what was good just two or three weeks ago, may not be good at present moment.

Buyers are not looking at your home.  They have determined that the home may not meet their needs or it may not be priced fairly for the market.  This is not always an indication your home is priced too high.  It could be the location of the home, current market conditions (high interest rates, etc), or high inventory of homes giving buyers several options.  You will need to sift through these to decide the next appropriate action.  Run more ads, lower price, or wait longer to sell.  This will obviously depend on how quickly you need to sell your home.  Lowering the price below market value will bring perspective buyers but may not be the most ideal option.  Again, only you will know what is right for you.

Buyers are looking at your home but no offers are coming in.  Your home meets buyer’s needs, but buyers may be finding better properties on the market for the price.  This is usually indicative of a higher inventory market where buyers have several options.  Make sure you know your competition and where they are priced.  It will help you decide whether to lower your price or change the way you advertise.  You may want to call out specific features of your property that others may not have before you lower the price.

Setting the right asking price for your home can be a daunting task, even if you already have a solid estimate of its value. The amount you decide on can have a significant impact on the success of your sale, and it can be challenging to determine the optimal price without the help of a skilled real estate agent. Fortunately, one of the benefits of working with an agent is their ability to provide valuable market insights and help you set a precise, competitive asking price that will attract the right buyers. However, if you choose to sell your home without an agent, you may need to do a little extra research and legwork to arrive at an optimal price point. Nonetheless, with careful consideration and research, you can determine a reasonable asking price that will maximize your profit potential and increase your chances of a successful sale.