If you’re like many people, you know that pricing your home properly is essential if you intend to sell quickly. But how do you settle on the right price? This guide explains.
The Ultimate Guide to Home Pricing
Pricing your home properly right out of the gate is imperative if you want to sell quickly (or at all). However, this is one aspect of selling a home that many people get wrong. If you’ve ever scrolled through a home listing website and seen labels such as “Price Reduced” or “Listing Withdrawn,” you’ve likely encountered homes that were priced incorrectly to begin with.
First things first: You should listen to your REALTOR® when it comes to home pricing. Your real estate agent is trained in pricing homes properly, and he’ll crunch the numbers to help you determine the right listing price for your home.
How Do REALTORS Figure Out Listing Prices?
Real estate agents use several methods to determine the appropriate price for a home. First, your agent will start with raw data; he’ll look at the homes that have recently sold in your neighborhood and the surrounding area, homes that are currently on the market, and homes that were on the market but never sold. He’ll also look at all the amenities your home has to offer, how close it is to nearby amenities (such as grocery stores, retailers, restaurants and other attractions), and the upgrades and repairs you have made.
Using a series of calculations, your real estate agent will determine what buyers are currently willing to pay for homes similar to yours. Then, your agent will adjust pricing up or down based on local factors. The price your agent comes up with is the price that your home is most likely able to sell for if you put it on the market right now.
The Single-Most Common Mistake Sellers Make
When it comes to home pricing, the most common mistake sellers make is attaching sentimental value when they should be focused on monetary value. Often, sellers believe their home is worth a bit more based on their emotional connection to the space. Unfortunately, buyers are only looking at the numbers – and they’re comparing your home to all of the other homes for sale in the same price range.
What Happens if You Overprice Your Home?
If you overprice your home, it’s most likely going to sit on the market, unsold. Here’s why that happens: The overwhelming majority of buyers begin their home search online. When searching online, buyers can set price parameters. They only look at homes they can afford.
If your home is priced at $500,000 but your REALTOR has told you that buyers are only likely to pay $450,000 for it, your home is competing out of its league. It’s up against other homes that are accurately priced at $500,000; those homes may be larger or newer than yours, and they may have more amenities or be located in a more convenient place. That means your home, as nice as it is, is going to come up short.
What About Reducing the Price Later?
Unfortunately, many sellers who overprice their homes end up needing to reduce the price later. There are two problems with this: The first is that buyers can see when a home’s price has been reduced. They can see when a home was first listed, and they may wonder why no one has purchased it yet – and they’re very likely to wonder what’s wrong with the home and why you had to slash the price. The other problem is that the older your listing is, the lower it appears in search results on listing websites. Buyers see newer homes first, and every day, your home gets pushed farther down; that makes them more unlikely to see it.
What Happens if You Underprice Your Home?
The most obvious consequence of underpricing your home is that you’re leaving money on the table. That’s cash you could use for a down payment on your next home, your dream vacation or anything else. That’s why it’s so important to listen to your real estate agent when it comes to pricing.
What Are Your Chances of Sparking a Bidding War?
Sometimes underpricing a home is a great real estate strategy, but it doesn’t work in every situation. However, if your REALTOR believes that it’s a good idea to set your listing price just shy of what your home is really worth, it’s most likely because the market is hot and you may be able to spark a bidding war. In bidding wars, sellers always win; that’s because multiple buyers are trying to outdo each other by paying more for the home.
Are You Buying or Selling a Home in Baltimore County or Howard County?
If you’re ready to buy or sell a home in Baltimore County or Howard County, we can help. Check out these listings:
- Homes for sale in Baltimore County
- Homes for sale in Howard County
- Homes for sale in Ellicott City
- Homes for sale in Columbia
- Homes for sale in Catonsville
- Homes for sale in Owings Mills
- Homes for sale in Pikesville
If you’re thinking about selling your home, we can help you sell it quickly – and at the best possible price. You can:
- Find out how much your home is worth now
- Learn how we market your home to put it in front of all the right buyers
- Get a general overview of home-selling in Maryland
If you have specific questions, fill out the form below or call us at 443-955-1227 – we’re here to help you with any aspect of your real estate transaction.