Tip for Sellers – Price
Your house is ready to sell. You paid attention to your agent’s staging advice (or perhaps you hired a stager). Your walls are painted, the floors are in amazing shape, personal items are removed, and everything you needed to repair is complete. It is time to get your home on the market!
So how do you determine at what price to list the home?
The answer is not:
- Take the amount you paid for the house, and increase by 5% (or any percentage) for every year you’ve been living in the house.
- Start with the price you initially purchased your home for, add in all the updates and repairs you’ve ever done, then add a profit margin on top of that.
- Assume you can sell it for the same exact amount that bigger home down the road sold for. After all, you have a pool and your lawn has better landscaping. You have to get at least the same amount as they did.
- Use the number your uncle, brother, dad, dentist, cousin, said the house is worth. They should know – they’ve been looking for new homes themselves.
- Price it at the amount you need to get in order to purchase your next home.
- List it at the same price as an estimate you found online on one of the national home sites.
None of those are good ways to come up with a price for your home. The correct way is to utilize your real estate professional’s pricing guidance. Specifically, your agent should prepare a comparable market analysis (CMA) for you which will be your roadmap to arriving at the right price point.
The CMA could assess a combination of recent sales in your area, homes that are under contract, expired listings and active listings. All are important for different reasons, but the most important are the recent sales. Those show you exactly what buyers are willing to pay for homes in your area and that’s the crux of finding the correct price point. Buyers will only spend what they think your home is worth, no more.
The easiest CMA to develop is the one for an area that has a lot of recent sales for similar homes. Especially if there are several that were the same general size, with similar features and condition as yours. If there aren’t, then comparisons will be made with less-similar recent sales. In either case, adjustments will be made to the price analysis to reflect pluses or minuses as compared to your home. For example, if you have beautiful views of mountains or lakes, or if you have an updated kitchen, the sale prices of homes that did not have those things would be adjusted so an appropriate comparison can be made.
In addition to sold homes, homes that are under contract will be assessed because these are very recent indicators of what price points get buyers to the offer stage. If a home similar to yours was listed at $600K and it immediately went under contract, that can provide insight into what your home should be listed at or near for a quick sale.
Looking at homes that are currently on the market is important because that is your competition. If you want to get your home sold quickly, you’ll need to make sure it is priced well in comparison to the competition. And expired listings can give some insight into what did NOT sell, which is also useful information.
Your agent will take all that input and come up with a data-driven price range for your use. Determining the specific list price could be driven by your timing requirements. How quickly you want to sell may direct you towards a specific side of the pricing range. If you are in a hurry, you may want to select a price towards the lower end of the market range. If you have time on your side, you may opt for a range on the higher end. Either is fine, based on your own needs at the time you put your home on the market.
Sometimes, though, sellers insist on a price point over the top recommended price by their agent, because they just can’t believe they wouldn’t get a lot more for their home. Or perhaps they just want more than the market is suggesting. Those sellers can wind up not only with a much longer selling window, but with less than they would have received if they priced their home correctly in the beginning. The longer a home is on the market, the more buyers might wonder what is wrong with it. Why isn’t it selling?
That being said, if you decide to list at a price point over the maximum suggested by your agent (and if your agent agrees to do so), you should have a plan in place on when to reduce the price. In other words, if you haven’t received an offer within two weeks, would you be willing to reduce and if yes, to what price? If you don’t have any showings within the first few days, the same question applies. You don’t want to leave your home in an overpriced state for too long.
So the keys to pricing correctly are to assess your home against those that recently sold in your specific area, as well as homes that are under contract, for sale now, or those that did not sell. Using that knowledge properly will help you get your home sold for the best possible price.
If you need assistance with the sale of your home in the Kalispell, Bigfork or Lakeside MT area, feel free to contact me at 406-270-3667 or via email at firstname.lastname@example.org.
For more seller tips, click here.