Who says what my home is worth?

Crumbled Dollar When it comes to pricing your home, you’ll find lots of “experts.” The neighbors may want you to set a high price, thinking it will make their homes more valuable. Your company may encourage you to set a lower price so the home will sell quickly and you can move to your new assignment. You might be thinking in terms of what you paid for your home, how much you’ve spent on it, or how much profit you want from it.

But who sets the price? When you put your house on the market, you set the asking price. But it is the market that determines the selling price. If the asking price is set correctly, the house is likely to sell fairly quickly. If set too high, the house may languish on the market, unseen by the right buyers.

Pricing It Right

  • A correct asking price is crucial to a timely sale. That’s where we come in. But how do we know how to advise you on price?
  • First, we look at the prices brought by similar homes recently sold in the area, and compare their features to those in your home.
  • Then we survey the competition, seeing what homes are currently on the market, how they compare to yours and how long they have been up for sale.
  • Next we look at how the number of buyers compares to the supply of homes for sale.
  • We take stock of the direction of the market. Are prices rising or falling? Are homes selling quickly for the asking price?
  • Finally, we look at the incentives other sellers are offering, such as paying some closing costs, and what conveys with the property, like draperies or washer and dryer.
  • As you noticed, neither how much you paid for your home nor how much money you wish to profit from the sale affect the market value of your home.

Avoid “Testing The Market”

  • Many times, sellers are tempted to price their homes a little high in hopes of getting more money from the sale. But often the opposite happens, and they sell – after a long time on the market – at a price below what the home would have sold for if it had been priced correctly at first. This is because most buyers look only at homes they can afford.
  • If a home is overpriced, many potential buyers don't bother to consider it because the asking price is above what they can afford to pay.
  • Buyers who do tour the overpriced home see that it doesn't measure up to others in the same price range.
  • By pricing the home close to market value, on the other hand, the sellers make the most of their best opportunity to sell to the home's true market during the highest traffic period – the first weeks after the new listing comes out. That's when real estate agents call in the buyers they have been working with to see what's new on the market.

For a personal pricing consultation, please give us a call or send an e-mail question of your own. We’d like to help you price your home right from the start.

Why is it dangerous to overprice my home?

 Sometimes sellers are tempted to test a higher price at first to see if they’ll be lucky enough to find an uneducated buyer willing to pay. Unfortunately, experience shows this “Why not?” pricing strategy rarely pays off. Instead, asking the right price from the start avoids the many dangers of overpricing.

The right sales price is based on several factors: size of the house and its special features and amenities, recent home sales, demand for homes in your area and prices of similar homes currently on the market.

Although you may have decorated lovingly or renovated extensively, those improvements may have only a small effect on the market value of your home. In fact, personalized decorating can even slow a sale unless the style has wide appeal.

Overpricing Dangers

  • Here are 8 proven reasons why it’s dangerous to overprice your home:
  • You will miss out on pent-up demand. Most activity on a listing comes within the first 30 days. An initial high price can discourage buyers – causing you to miss out on pent-up demand – or tempt them to wait for the price to come down.
  • You will reduce buyer pool. Too high a price will eliminate a whole class of qualified buyers. Many buyers know just how high they can go and don’t even look at homes priced above their ceiling.
  • You might turn off buyers. You may experience few or no showings because some prospective buyers who can afford the price won’t waste time with an overpriced listing. They know they can get more house for their money elsewhere.
  • You could sell the competition. Overpricing helps sell other, more competitively priced homes first. Your home may be compared to underscore what a good deal another home is.
  • You could frustrate prospects. Prospective buyers who might stretch their best offer can become frustrated when they can’t buy the home they want at a fair market value – only because an unreasonable seller insists on accepting only a premium price.
  • You will frustrate your own timetable. You could become frustrated, too, when your house fails to sell in a reasonable amount of time, leaving your plans in limbo. Only a price reduction is likely to help sell your house faster and meet your "move out" timetable.
  • You will raise doubts about hidden problems. If your overpriced house stays on the market for a long time, it may eventually be seen as "stale inventory" which can suggest structural or mechanical shortcomings, even after you lower your price.
  • You will risk lender rejection. If you do get a sales contract, the contract may fall through because of a too-low appraisal. The buyer may not be able to borrow enough to proceed with closing.

If you are thinking of selling your house, give us a call or send an e-mail. We’ll be happy to maximize your return by helping you set the right price.

What factors do NOT affect my price?

Gold Egg Ultimately, a house is worth what someone is willing to pay for it – the fair market value.

  • Some of the items we do not consider include:
  • The original cost of the home
  • Money spent for improvements
  • How much cash you would like to net from the sale

While these factors are important to you, they have no bearing on the fair market value a buyer will be willing to pay.

My house is one of a kind. How do you put a price on a unique property?

Cookie Cutters How do you decide what price to ask for your home when it’s one of a kind?

  • Call the real estate professionals. For an up-to-the-minute market figure, contact us. We can tell you the value range of your home by comparing it to similar properties recently sold or for sale in the area. Even though your house may have special features that make it unusual, there are many aspects of your home which are like others – general location, size of the home, number of bedrooms, baths, size of the lot, etc. Some unique features, like a swimming pool, an historical designation or a custom floor plan may actually make a home more difficult to market.
  • Hire an appraiser. Another way to determine the value of a home is to pay an appraiser. A pre-market appraisal may help speed a sale, especially when the house is priced at or below the appraised value. An appraiser typically looks at the records of comparable properties sold in the past 6-12 months, the home's replacement cost and the value as a rental, then reconciles the three figures in a formal report.