Did you know that the most important part of listing your home for sale is making sure to set the correct asking price from the beginning? The amount you choose for an asking price can mean the difference between success and failure when it comes to the home selling process. Your asking price can help the home sell quickly and without effort, or it can create a stall that causes your home to sit on the market too long without offers or with multiple price adjustments. Though we don’t want to think about such things, the wrong asking price could cause your home to become unsellable. Let’s take a closer look at this home sellers guide to pricing your home to sell.
💵 The Cost of a High Asking Price
What makes a house unsellable? Your home may be considered unsellable if the property develops a bad reputation. We aren’t talking about unsolved mysteries, hauntings, or crimes, we’re talking about rumors that are centered around the asking price being set too high.
Let’s say that a buyer approaches the real estate market with high hopes. The buyer checks the property inventory in the area and waits for new listing alerts to arrive in their email inbox. Once a listing alert arrives, they dash off to check the listing details. While checking the new listing, they notice that your home, which they’ve noted as a property of interest, is still on the market. Not a big deal the first week. What about week two? Let’s say they look again to see the home is still available, but the price is now reduced. Another week goes by with another reduction.
At this point, the buyer begins to wonder what is wrong with this property. If no one else is interested, there must be something wrong. In most cases, the buyer will strike your property from their list of potentials. After all, your home could have electrical problems, plumbing issues, or structural damage.
At this point, you may be forced to hit the reset button. That means you’ll remove your listing and wait for a while before re-listing the home to try again. Setting the wrong asking price can cost you valuable time.
💲 The “99” Mistake
As consumers, we are swayed by the idea of a deal, a bargain, the best price, and the bottom dollar. When we want to move a product quickly, we place it on sale or list it at a bargain price. An old marketing plan that works is to use .99 instead of $1.00. For some reason, we would rather spend $2.99 than we would $3.00. Unfortunately, this mindset is accepted by some home sellers when considering the asking price of their property. They think that setting the price at $399,000 instead of $400,000 will get their home sold quickly. There’s a problem here when it comes to real estate.
Buyers typically search in price ranges when looking at home listings. If you’ve set your home’s asking price at $399,000, you’re missing the buyers who are looking for homes in the $400,000 to $500,000 price range.
The fact is that most home buyers start searching for homes at the low end of the budget, not the high end. If a buyer’s budget is between $300,000 to $400,000, your home may fall in their price range, but it’s at the very top of their budget. IF they even make it to your listing, they may strike it off their list because it’s at the top of their range.
By pricing your home at $399,000, you’re missing the people who are shopping at the $300,000 and higher range because they aren’t seeing your home. You’re also missing the buyers who are looking under $300,000 because you’re too close to the top of their budget. While this marketing idea may work for retail sales, it’s not suited for a successful real estate sale.
📝 Importance of Being Objective
If you ask a home seller what they plan to ask for their property, you’ll notice that something happens within them to flips on an internal switch that begins to play back memories. All at once, they see a life being lived inside the walls of that home. They replay memories that involve celebrations, events, gatherings, parties, and personal experiences. They may think back to the painting, floor installations, kitchen renovations, and other upgrades made throughout the years. They will think about beloved pets and memories with them. Ask them what their home is worth? Priceless!
Unfortunately, we can’t place a price tag for a physical structure according to personal experiences, time invested in the home, or wonderful memories. The memories aren’t for sale. It’s important to stay objective when setting the asking price and to remember that you are focusing on a property’s specifics such as size, rooms, and location.
It can be a challenge to remain objective, but if you can keep in mind that those memories and experiences are yours to keep, you may find the process easier. You will take those memories with you wherever you move, and you’ll begin to add new ones to the archive once you settle into your new home.
💰 Return on Investment
If you are an investor who is purchasing property for the sole purpose of turning a profit within a particular time frame, you should absolutely concern yourself with selling the house quickly for considerably more than you paid. However, if you’re a person who bought a house several years ago as a personal residence, the return on investment shouldn’t be your first consideration when pricing your home.
Real estate market values change over time. Price values go up and down from month to month, and things get even more interesting when comparing year-over-year values. The real estate market is impacted by everything from natural disasters to election years.
When you price your house, it’s not so much about what you put in when you bought it, but more what a buyer will pay for it today. If the projected home value seems off to you because of the current real estate market, and you just can’t dream of pricing your home in the suggested range, you may want to discuss things with your real estate agent and decide on the right selling timeline for your goals. You may find that it’s better to sell in the current market in spite of the difference you feel exists in current value and what you feel should be listed.
📱 Free Home Valuation Calculators
One of the easiest ways to get a basic idea of the value of your home is to use an instant home valuation calculator. These are extremely convenient, and it’s fun to see what your home is worth in today’s market. They are also easy to use. You simply put in some basic information and in a few seconds, you’re holding the potential value of your property. While these calculators are good places to begin when it comes to figuring out the value of your home, you’ll want to get with a real estate agent to look closer.
A real estate agent will compile a comprehensive home value report that looks at the current real estate trends, your location, similar listings in the area, and any upgrades made to the property. When you’re working on setting the asking price, you should take advantage of a home valuation calculator, but don’t stop there. Contact us to get a more detailed evaluation that will keep you from losing money when setting the listing price.
📋 Listing Appraisals
Listing appraisals, or pre-appraisals, are a smart addition to the home valuation calculator results that don’t use a human assessment element to give you an amount. When you order an appraisal, a trained professional conducts an assessment of real estate based on education and experience centered on scientific and creative data processed within the industry. The appraiser obtains public records information, a comprehensive market analysis report (CMA), and then visits the property to personally inspect and assess the condition.
The appraiser not only provides estimates of what he or she believes your house may be worth but can also supply you with information that can help you increase the overall value of your home by thousands of dollars. For example, appraisers measure real estate values in $500 increments. If your appraiser notices torn window screens, oily doors, cracked electrical sockets, rusty doorknobs, leaky sinks, or other small items, those small items get grouped together into a $500 bundle, even if it would only cost you $40 and $40 minutes to make repairs.
Keep in mind that the buyer’s mortgage lender will order an official appraisal once you accept an offer on the home. The pre-appraisal you order is for your benefit when it comes to setting the asking price and making improvements. Though it may help when it comes to offer negotiations, a buyer may not be moved by the results and consider it less than objective.
The real estate market is a fast-moving river when it comes to information. Keep this in mind when considering timeline for your appraisal. The appraisal you had done 3 months ago may bring back a different result today. However, it’s still beneficial to get the professional assessment completed by someone who is trained to tell you how much your investment is worth.
🙋♂️ Your Real Estate Agent’s Opinion
When it comes to pricing your house for sale, your most reliable resource is your real estate agent. Your real estate agent’s first job is to help you set a competitive sales price for your home.
Your real estate agent gets paid by commission, so he or she earns a paycheck that is in direct correlation to a percentage of the price of your house. Because your agent has personal gain in the process, you can rest assured that your agent will recommend the most competitive price possible. You can count on them to also establish a fair price to keep your home from sitting on the market without offers, which would not be good for either of you.
We mentioned a comprehensive market report earlier. This is a report that details real estate transactions in your area. You’ll be able to see a list of recently sold homes, their original asking price, length of stay on the market, number of price reductions, and the final sales price. This is a goldmine of information because you can see the results of good pricing vs. bad pricing. You can measure the consequences by seeing how long a house remained on the market before selling.
Don’t be confused by the terms asking price and sales price. Both numbers are important, but they’re not the same. Asking price is what the seller hoped to gain from the sale of the home whereas selling price demonstrated what buyers were willing to pay. If your price is too high, then when buyers submit offers, the price they offer to pay will be less than what you’re asking.
You and you alone are responsible for setting the sales price on the house you’re selling. To determine the price, you can utilize a multitude of tools and resources for best outcome. Obtain a free online home valuation calculation. Compare that number with the estimate provided by the listing appraiser. Couple that information with the expert advise you obtain from your real estate agent and the comprehensive market analysis and you’ve got a good idea of how that information is beginning to shape up. Don’t rush to find a price for your house, and don’t sell yourself short by trying to list it with a discount price. List it for a fair price in comparison to other homes in your area and you’ll find that you can sell your house quickly, for top dollar, and minimal stress all by applying the right pricing strategy.