Finding the right price for your home can be difficult. Too high and you won’t attract any buyers. Too low and you leave money on the table. It’s a delicate balance, but not an impossible one. If you’re thinking about selling, here are some tips to help you price your home.
Look at Similar Homes in Your Neighborhood
When pricing your home, the best place to start is by looking at comparable homes in your area. Pull comparable listings (also known as “comps”) to see what they’re selling for. Because value is based on square footage, look for houses the same size as yours (plus or minus ten percent) that have sold over the past three months.
Review at least three to get a good idea of what prices are typical for your area. If you like, you can even call active listings to see what kind of offers they’ve received. Agents are under no obligation to share this information, but some will.
Geography is equally important. Don’t look at homes more than ½ a mile away and pay attention to major dividing lines. Railroads, highways, and city boundaries have a big impact on desirability. Homes on opposite sides of the street sometimes differ by as much as $100,000!
Determine Your Price Range
In order to avoid overpricing or underpricing, never list your home for more than 10 percent more or less than the average home in your area. That’s your price range. And even though it’s tempting to go for as much money as you can, pricing your home on the lower end will often attract more buyers.
The more offers you receive, the more likely buyers are to go over the asking price. On the other hand, in a seller’s market, high prices won’t deter buyers or overbidding, so don’t be afraid to aim big if that’s the case.
Avoid Century Pricing
One of the best ways to attract buyers is to list your home below a century number (e.g. $499,999 vs. $500,000). Because buyers tend to search for homes with a price cap ($500,000 for example), avoiding century pricing makes it easier for people to find your listing.
Avoid Unconventional Pricing
An idiosyncratic price (e.g. $456,743) makes your home stand out in the wrong way. Buyers will wonder why that price was chosen and what’s going on with the seller. There are already a lot of factors to weigh when purchasing a home. Trying to guess the seller’s mindset is a needless distraction and will likely deter buyers rather than attract them.
Don’t Assume Improvements Add Value
Adding a new addition to your home doesn’t automatically add its costs to your asking price. Simply because your new pool cost $50,000, it doesn’t mean people are willing to pay $50,000 more than they were before. This isn’t to say you shouldn’t make improvements or ask more for extras, only that the price has to be comparable to other homes with similar features.
Always Be Flexible
Finding the best price for your home isn’t easy. Markets change and even experts misread them sometimes. A home that’s fairly priced one week could be overpriced the next. Double-check your listing if you aren’t attracting enough offers. It could be you haven’t posted enough pictures or need to add some extras such as a 3D walkthrough. Or maybe it’s not featured on enough sites.
However, if none of these draw more offers, the problem is probably the price. Remember, no matter how nice your home is, it always has to be in sync with the market.
Ask Your Agent
Real estate agents are great sources of information. They’ll know whether it’s a seller’s market or a buyer’s market and how much homes like yours typically go for. What’s more, they’ll know how much demand there is for the basic features in your house. (Upscale homes can be priced higher without dissuading buyers.) Always consult your agent before deciding on a price. Their input will help you determine whether it’s too high, too low, or just right.