Pricing

Price is the most important factor to consider when selling. So when pricing a home, should you list competitively, or should you speculate a bit?

 

What would happen if the real estate market suddenly shifted in favor of sellers, and you priced your home off comparable properties in your area that were now outdated? In this case, you would likely have an offer on your home within a couple days within 98-100% of your list price. You may even get competing offers and receive more than the original asking price. Your sale is now done and you can forget about it. You may have gotten $5,000 - $10,000 more in 30-60 days, but that is only a may have.

 

What if you decide to speculate a bit and you list for a modest $10,000-$15,000 over the determined market value (assuming an average price of $400,000 for the sake of scale)? Perhaps the perfect person who is looking for a house just like yours will ignore the rest of the homes on the market and decide to pay more for your property. Or, will it will sit for a while? No one knows for how long, but you will likely consider a price reduction. If the market is moving up, your home may sell in a few months when the market catches it, but what if it doesn't?

 

When considering a home purchase buyers don't look at price alone. They want to know how long a property has been on the market. If it has been sitting, they want to know why, and automatically assume that something is wrong. Furthermore, when they first view a home and decide it is not for them (could be price, layout, etc.) a price reduction rarely entices them to take a second look if they already feel that they don't like the home. Finally, if you are forced to price reduce, this can be a slippery slope. After waiting for 30 days in a slower market you will not be the only person who has reduced their price. You will still likely be overpriced, as everyone who was a victim of the slow market, is chasing the market down and lower-priced than they were before. You may now actually get less than you would have if it was originally priced lower due to the stigma of your home and potential market fluctuations. If you already bought another home, this can be a very stressful experience.

 

The key to pricing a home is to look at your goals and assess how soon you would like it to sell. If you would like to sell quickly, then price your home 1-2% below market value to cushion yourself from fluctuations and to get on with your goals. At market value, you should expect to sell in the average selling time which depends on your current market. When you are overpriced, no one wins.

*This article was written by Lindsey Smith.