Pricing Your Home
Pricing Your Home. One of the biggest questions you'll have when selling your home is how much you will make from the sale. The answer can depend on many factors, including the size and location of the property and the current state of the market. The sales price you set when you put your home on the market will also determine what kind of offers you get. Setting the right listing price is essential to ensure that you get the right amount for your property. If you set it too low then you will lose out, but if the list price is too high you'll fail to attract interest from potential buyers. Asking for advice from an experienced realtor who understands the local market can help you to get it right when you're pricing your home.
Why Pricing Matters When You Sell Your Home
The price you set when selling your home can make a big difference. Many potential buyers will limit their searches to homes within a certain price range. The price will also be one of the main factors when they are deciding whether to take a closer look at your listing. You must set a price that captures the attention of the right buyers and convinces them to make an offer.
The right listing price can help you to achieve a faster sale. It will ensure that your listing is viewed by people who are looking for this type of property. Potential buyers are more likely to ask to view a home that has a fair price. Setting the right price will also encourage them to make offers, because they will know you will treat them fairly.
Overpricing Your Home
It can be tempting to set a higher price for your home when you sell. You want to make as much as you can from the sale and you may feel very attached to the property if you've been living there for a while. However, overpricing can be counterproductive.
If the price is set too high, buyers who are looking for properties like your may not see the listing or may ignore it because of the price. Buyers who do take a closer look are less likely to be impressed by the property if it is smaller or not up to the standard of similarly priced homes. Your house could end up sitting on the market for a long time, making it less attractive to buyers who wonder why it hasn't sold. You could struggle to attract interest even if you lower the price later on, because buyers can be suspicious of properties that have been on the market too long.
Even if you manage to attract a buyer who's willing to overpay, the sale could fall through once they have the house appraised. Mortgage providers won't lend more than the property is worth, so their financing could fall through before the sale is completed.
You should aim to set a fair price for your property, based on the local market and the advice of your realtor. Find out how much your current home is worth before setting your budget for your new home, so that you don't feel trapped into asking too much.
Underpricing Your Home
Setting the list price low could seem like a good way to make a quick sale, but there can be some big disadvantages to underpricing your home when you sell.
The main issue is that you won't make as much as you could from the sale. You will lose out on money that you could have put into your next home or used for your future. You may be willing to give up some of your potential proceeds if you need to move quickly, but you shouldn't accept too little for your property.
Underpricing too much could actually put potential buyers off your property, making it harder to sell. Potential buyers might wonder if something is wrong with the property when the list price is clearly much lower than it should be. Setting a slightly lower price can work if your realtor makes it clear that you have a good reason to need a quick sale, but pricing your home too low can make buyers suspicious.
List Price vs. Sale Price
One important point to remember when pricing your home is that the sale price will often end up being different from the list price. Buyers will be guided by the price you set, but they will often make an offer that is slightly lower than the listing. You can decide whether to accept the offer or negotiate to get it a bit higher. Even after you've accepted an offer, there could still be some changes. The buyer will arrange an appraisal to check the value of the property and an inspection to detect any issues that need to be fixed. If these checks reveal any problems, the buyer may ask for a reduction in the price to cover any work that needs to be done. You need to set a list price that takes these potential reductions into account, without overpricing the property.
How to Set the Price for Your Home
You can get an idea of what your home is worth by looking at listings for similar properties in your area. You can also run a comparative market analysis to compare your property to recent listings. Kenna Real Estate provides a free market analysis through our website. However, you should still speak to an expert when pricing your home. Comparative analysis tools can't take into account all the features that make your home unique. The only way to get an accurate estimate of your home's value is to ask an expert.
Kenna's realtors can arrange a full assessment of your property and use their experience of the real estate market in Colorado to guide you towards the best list price for your home. We'll help you to set the price according to the value of your property, the current market, and other relevant factors such as how quickly you need to move.
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
- 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 on 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 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 alreadywaned.
- 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
- 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.
An agent has NO control over the market, only the marketing plan. Never select an agent based on price.
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