Many of the homeowners who previously held back selling their homes, waiting for the market to improve, are beginning to think that now may be the perfect time to sell. With home prices firming and the inventory of for-sale homes at 12-year lows, homebuyers are once again forced to compete for properties.
"Low inventory can be a double-edged sword," says Heather Embrey, an associate broker with McEnearney Associates in McLean, Va. "Sometimes sellers think they have the upper hand and can price their home higher because there's so little on the market, but a home won't sell unless it has a compelling price, not just a competitive one."
Price it based on comparable properties
Individual Realtors have varied methods for pricing homes, but most use a data-driven approach to advise their clients.
"Each seller and property is different, but it's important to look at all comparable properties before deciding on a listing price," says Joshua Baris, a Realtor with Coldwell Banker Residential Brokerage in Fort Lee, N.J. "You need to look at what's sold for the past six months and, even more important, what's on the market right now."
Tony Geraci, broker and owner of Century 21 Homestar in Cleveland, Ohio, agrees that homeowners need to know the price and condition of competing homes in order to set a list price.
"You need to know how many comparable homes have sold in recent months, how many are on the market and their price in order to get an idea of where your home fits in," says Geraci. "In order to sell your home fast, you'll need to offer it a better price or make sure the condition is better than the other homes on the market."
Geraci takes his sellers to visit comparable homes on the market so they can see what prospective buyers are seeing.
Embrey believes home sellers should focus more on recently sold homes than on the competition.
"What matters more is to look at other homes that have actually been purchased to see what they sold for," says Embrey. "Your neighbors may have their house on the market for $500,000, but if it hasn't sold in six months then it's probably overpriced."
The asking price of your home will also influence how many people view it online. Ninety percent of buyers use the Internet in their home search, according to the National Association of Realtors. Since most buyers will search online for properties in a particular price range, such as $300,000 to $350,000, mispricing it by as little as $100 could cost you a sale.
"Some Realtors like to choose something like $299,900, but I think you should just make it $300,000 so that buyers who searching in the $200,000 to $300,000 range will find it and so will buyers looking in the $300,000 to $400,000 range," says Geraci. "Buyers are more likely to look a little above their price range if they don't see anything they like, not lower."
Hire a local Realtor
It goes without saying that hiring a Realtor who's very familiar with your local market can be invaluable. A Realtor with local knowledge can help you establish a price intended to match your market that will generate multiple offers.
"If I think there's going to be a lot of interest in a home, then I recommend pricing just a little under market value to generate multiple offers," says Baris. "If I know a home is in a market where buyers are likely to come in with low offers, I'll suggest pricing the home a little higher so the sellers get as much as they can from their home.
"Sellers should be really careful about overpricing their home, because if you don't price it correctly the first time and you need to keep reducing the price, you're likely to end up selling for at least 10 percent less than you would have in the beginning," says Baris. "Homes that stay on the market too long and have multiple price reductions start to look like a fire sale."
A Realtor with local knowledge can help you properly price your home and suggest ways to improve your home's appearance, inside and out. Don't let something as simple as dirty dishes in the sink or an unrealistic opinion of what your home is worth stand in the way of getting top dollar for your home.
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Michele Lerner, author of "HOMEBUYING: Tough Times, First Time, Any Time", has been writing about personal finance and real estate for more than two decades for a variety of publications and websites including Investopedia, Insurance.com, HSH.com, SavingsAccount.com, National Real Estate Investor magazine, The Washington Times, Urban Land magazine, NAREIT's REIT magazine and numerous Realtor associations.