Ultimately, your home is worth, not what you think it’s worth, but what someone else is willing to pay for it. Set a price that best reflects what a buyer would expect to buy for a house like yours, and you’ll have greater success in attracting serious offers.
What to consider
- Neighborhood — Your neighborhood plays a huge role in determining what your home could sell for. Two identical houses in different neighborhoods will bring in radically different sale prices.
- Market value — Most homes tend to sell within 5%-10% of the market value, so a good rule of thumb is 3-5% above market value. Information a good Realtor uses to estimate market value based includes:
– Property condition
– Sales history
– Comparable homes that recently sold
- Market conditions and trends – There are many factors to consider in pricing your home that have little to do with the actual value of your home: mortgage rates, tax incentives, whether houses are selling quickly or slowly, even the time of year.
Setting a price that you think best represents the value a buyer will see in your property is critical to your success. If you don’t have the experience and expertise to price your home to sell, find a good Realtor
Why the right price matters
When “for sale by owner” (FSBO) sellers fail, overpricing is the single biggest reason. Overpricing reduces seller interest and makes competing homes look like better values.
Too often, homeowners overprice because they reason that they can “test” the market, starting high and just dropping the price if they don’t sell right away.
The problem with “testing” is that the first four weeks your home is on the market are critical to your success, because that’s when it gets the most attention from buyers’ agents. If you wait to price your home right, you will likely have a much more difficult time attracting buyers – and attracting a good offer.
If your home sits for too long, regardless of the price, people might begin to wonder if there’s something wrong with it, and, as their perception of your home’s value declines, so will the price people are willing to pay for it. Sometimes, sellers who overprice their homes can wind up getting far less than they should have. Remember, also, that while your home is sitting there, you are still paying utilities, taxes, and upkeep.
It is important to keep in mind that the person who ultimately decides the price is the buyer, not you. Set the right price at the outset, leaving in some bargaining room, and your chances of selling your home quickly will improve.