Have you been following along with our “Sell Your House” series? If not, start here for tips on choosing a realtor. Missed part 2 on getting your home ready to sell? Find it here.
Setting the price for the sale of your home depends on a lot of factors, none of which have anything to do with how much you paid for the house or how much you want or need to get paid for it. Setting the price for the sale of your home does depend on the current state of the real estate market and the price of similar homes sold in your area in the last several month. Enter the experienced and well-qualified realtor you chose after reading our “Choose a Realtor” post! A realtor with a proven track record of market knowledge will complete a thorough market analysis of your home taking in to account the condition, any updates you’ve made, what similar homes in your area have sold for in the last several months, what similar homes in your area are currently listed for, and current real estate data for your market. Based on this data, your realtor should have a suggested window of price points. This is where we take in to consideration other factors such as how soon you want or need to sell your house, what your next home will be (do you need to sell your current home before purchasing your next), your tolerance for risk and your level of patience.
Pricing High
Setting a higher sales price has its benefits – like more money in your pocket, of course. Setting it too high can create opportunities for more risk. If your buyer is taking out a mortgage, their bank will do an appraisal. If the appraisal doesn’t meet or exceed the agreed-upon sale price, it’s back to the negotiation table you go where your options are to come down in price, get the buyer to come up with cash or different financing, or cancel the agreement altogether and put the house back on the market. If your home sits on the market at that price with little interest or no offers, a price reduction can always be made. The longer a home sits on the market, the more “stale” the listing becomes. Buyers start to wonder why a home hasn’t sold, especially after a price reduction or two. It could be in perfect condition, but the listing history makes one think “what’s wrong with this house?” and increasing the possibility of even lower offers.
Pricing Low
Entering the market at a lower price has its benefits and disadvantages, too. Biggest disadvantage? You could net out less money than the market should support. Setting your sale price at the lower end invites the possibility for multiple offers thus giving you the opportunity to choose the offer that best meets your home-selling goals. There’s a disadvantage to multiple offers, too. Some buyers are scared off or not interested in participating in a bidding war. Multiple offers can also drive the offer prices over market value and then you’re back to the risk of appraisal issues and renegotiating.
This is where the advice of your Realtor and an honest evaluation of your selling motivation come together to set a price that best serves your needs.
Get ready for photos and showing using tips in Part 5: Make an unforgettable first impression
