If you’re thinking of selling your house, this is the season. Prices are usually highest in summer, according to the National Association of Realtors. The weather is pleasant and kids are out of school, making it easier for families to move.
But getting the best price and doing so quickly requires sound strategy. Sellers may be torn between two approaches: Price the home lower than everyone else in the hope it will sell fast and maybe even spark a bidding war. Or, price it high with the idea that you’ll always be able to drop the price if no one bites.
Both approaches have their place. And both carry risks.
Look at it from the perspective of a buyer. Online marketplaces let them know instantly when a new home becomes available in their price bracket. If your home appears overpriced, buyers may reject it without ever setting foot inside.
You’ll know your listing price is set too high if agents aren’t making appointments to show it to buyers. On the other hand, writes Djana Morris, an agent and a Washington Post contributor:
If there have been lots of showings and no offers, feedback from buyer’s agents will be key to figuring out if there is an issue that can be resolved or whether a price reduction is warranted, or both. When a property is priced correctly for the market and its condition, it will receive offers.
If you’ve set the price too high you can always drop it, of course. But older listings generally don’t get the buzz of excitement generated by newer listings. Buyers can see online if a home’s price has been reduced and by how much. They may see reductions as a signal to make a low-ball offer.
So the risk of this approach is “[e]ventually you may sell it, but more than likely the final sales price will be lower than your correct initial price would have been,” says Realtor.com.
Price too low, on the other hand, and you might leave money on the table. Sometimes, in a competitive market with lots of homes for sale, setting a price lower can grab buyers’ attention and spark a bidding war. But that only works under certain conditions. Zillow’s blog explains:
These home are generally in a good location and in their best showing condition. And for all you know, the seller of the low-priced home with multiple offers was in a rush to sell and left money on the table.
12 steps to the correct price
Ultimately buyers, not you, will decide your home’s value. The best move is to try to put yourself in buyers’ heads so you can see your home as they do and price it accordingly. Here’s how to proceed.
1. Curb your emotions
It is understandably difficult to make business decisions about a home that holds precious memories. There’s a human tendency to assume that, “if it’s mine it’s worth more.” Emotions can make it hard to have a realistic view of your home’s value. Plan to receive advice with an open mind and be as objective as possible.
2. Get the house in tip-top condition
If you want to set your home’s price ambitiously, make sure it is the best-looking property in its price bracket. Make all needed repairs, clean it until it sparkles, upgrade the paint, carpet and fixtures and be sure to address potential objections a buyer may have to the home before you list it.
3. Tour competing listings
Become acquainted with the competition by viewing properties for sale in your market in your price bracket. Do this several weeks before putting your home on the market.
4. Get a comparative market analysis
Ask a real-estate agent for a free comparative market analysis (different from an appraisal), in which the agent gathers data on recently sold homes nearby in your price range. These are your home’s “comparables,” or “comps.”
5. Have a heart-to-heart with your agent
If your agent pushes for a lower price than you think is justified, it’s in your interest to question and understand the reasons. Agents do have an incentive to price a home lower in order to sell it, make a commission and move on to the next sale.
Says the Zillow blog:
An agent who doesn’t get their way on pricing may end up sabotaging your sale. A good agent will agree to support your higher price strategy, but have a price discussion after some time on the market.
Agents with integrity can balance their needs with yours and can explain which strategies work best in your market. It’s critical to find an agent you can trust. Collect recommendations from friends and relatives and interview several agents in your search for a trustworthy professional.