Determining the best asking price is one of the most important decisions that you make when selling your home. Priced right from the onset, you maximize your opportunity to reach the most qualified buyers and negotiate your best actual sale price.
By far, the biggest mistake some sellers make is to over price their property. As realtors, we have often heard, “If a buyer is interested in my property but thinks the price is too high, they can make an offer and we can negotiate.” But the reality is that if the asking price is too high, buyers will just pass your property by and move on to the next. There won’t be any offers to negotiate and, in fact, there may not even be any calls asking about your property, much less to set up an appointment to see it.
Your home will be seen in a list with others in your area and when it’s not priced correctly, it is often obvious without even touring your home. Here is some common sense about pricing. There are seven things you should consider when determining your listing price.
1. Its location
2. Immediate properties & surroundings
3. The overall condition of your property
4. Your homes positive and negative features
5. The current real estate market condition
6. Comparable recent sales
7. Other comparable properties on the market at the same time
We’ll elaborate on all of these a bit later, but first a question: Why should you think about all of these when pricing your home for sale? The answer is simple: “Because every buyer will.”
There are also seven more things that should never be part of a pricing decision. Let’s call them “THE SEVEN DEADLY SINS OF PRICING A REAL ESTATE LISTING”. Like it or not here they are:
1. What you want to sell it for
2. What you need financially to sell it for
3. What you still owe on your mortgage
4. The assessed value
5. What it’s insured for
6. The cost to replace/rebuild it
7. What your well intentioned friends or neighbors think you should get
Why should you NEVER consider any of these factors? Again, the answer is simple: “Because buyers know that none of these have anything to do with what they might be willing to pay”.
It’s so easy for all of us (this author included) to see all the value in our home and miss the things that detract from it. We grow used to our home’s imperfections and we all obviously want to be optimistic about our overall financial situation. But at the end of the day, it is the market that will determine the price of your property, not you, not us and not any one buyer either.
Want to get top dollar when you sell? Here is our best advice – avoid the very big mistake of over pricing. Our qualified agents can help you analyze all seven important things you need to consider. We will prepare a Comparative Market Analysis that takes all seven important factors into consideration. We will review it with you and make suggestions of things you can do to prepare your home so it sells for top dollar. Then you will be equipped to make the right pricing decision and set yourself up for the best final selling price.
Here is a detail overview of the seven things you should always look at when considering your asking price:
1. Location – the biggest word in real estate. Why? Because the same home in another location might be worth 10, 20, 30, 40 or maybe even 50% more or less! A home just like yours several miles away in a different setting, closer to or farther from a host of things is really not “a home just like yours” at all. Location isn’t everything, but it is the biggest thing. It might add value or subtract it, but if you don’t adjust your price for it, you might suffer the consequences of being over-priced or set your self up for leaving money on the table.
2. Immediate properties & surroundings – It’s common knowledge that with a lake or golf course at the edge of a property it’s worth a lot more than if it is just in the middle of a pleasant subdivision. But there are many elements in a property’s immediate vicinity that affect its value. A late night commercial establishment, an apartment or a factory next door all have negative effects on price. Beautiful, well-kept similar homes all around, a park across the street or a creek at the back of the property – all likely pluses. A busy street or a quiet one; a plus or a minus. All of these influence buyers and that means they all influence your selling price.
3. The overall condition of your property – When your home is above average in its overall condition compared to other similar homes in the neighborhood, it is worth more. If your home is below average, buyers will see that too and it must be priced lower to reflect that.
4. Your homes positive and negative features – If your home has professionally finished kitchen or garage – these are pluses. Buyers will recognize the added value and will not be put off with a somewhat higher asking price. But if your home lacks a garage, or central air conditioning; if the roof is old and the windows are bad, you’re listing will be dead in the water if it’s not obvious you’ve adjusted your asking price accordingly.
5. The current real estate market condition – In a slow market your price must be a bit soft. In a hot market, it’s usually worth “fishing” just a little to find the top. Asking just a bit more than you think it’s worth when the market is very busy to see if you’re getting interest, is a great strategy to insure that you’re not underpricing. But this strategy comes with a warning not to get crazy about it. If your listing gets old, you’ll likely pay a price when buyer after buyer thinks there must be something wrong with the property since it’s been on the market so long. In a buyer’s market you can be a bit aggressive.
6. Comparable recent sales – There is nothing more rock solid to build a price on than recent sales of comparable properties. The market sets the price of every property and sales of similar homes are the result of recent market activity. The best tool for determining a selling price is a Comparable Market Analysis. Realty Dynamics agents receive special training in how to prepare the most accurate CMA you can get anywhere. It’s part of our full listing services that sets Realty Dynamics apart from the crowd.
7. Other comparable properties on the market at the same time as yours. Other homes for sale will be your homes competition. They are the other properties that buyers look at next to yours.
Happiness is knowing you got the best price!