Home sellers naturally want to sell their home quickly and for the highest possible amount. The key is the asking price. Here are 10 tips to help you price it right.
No. 1: Consider the comps. "Comps" are comparable homes in your neighborhood that were for sale, recently sold or are currently for sale. Comps are the most important factor in pricing your home.
Consider comps in conjunction with local market conditions, including the supply of for-sale homes relative to buyer demand, says Allyson Bernard, owner of Real Estate Professionals of Connecticut in Danbury.
"Less inventory means you can probably push the envelope a little bit on (pricing) your home, but we're not in a market where you can double your price or increase it 30 or 40 percent above what the comps are showing," Bernard says.
No. 2: Check out the competition. Visiting currently for-sale comps can help you compare them to your home.
"At a minimum, you need to know what location they're in and what curb appeal they have," Bernard says. "If there are open houses, go through. Just be honest with whomever is at the property. Say you're working with another Realtor and contemplating putting your home on the market. Ask whether it would be OK to walk though."
No. 3: Price to appraise. Sold comps should get extra weight, says Jean Bourne-Pirovic, a Realtor with Long & Foster Real Estate in Silver Spring, Md., because your sales price will be subject to an appraisal, unless your buyer agrees to pay cash or waives any appraisal contingency. The appraisal of your home will be based on sale prices of sold comps. If the appraisal doesn't support your agreed-upon sale price, the deal might not close.
No. 4: Don't pay for an appraisal. Though the buyer's appraisal will be important, you don't need to obtain a separate prior appraisal to price your home. Instead, Bernard says, you should be able to rely on your Realtor for the information you'll need.
No. 5: Rule out square footage. It's OK to consider price per square foot "as a general statement," but this calculation shouldn't be a primary or decisive factor because it's nearly impossible to compare two homes on this basis alone, says Gary Rogers, broker/owner of RE/MAX On The Charles in Waltham, Mass.
For example, one house might have a buyer-preferred floor plan while another might have chopped-up rooms, yet both could be the same size. Price per square foot can be somewhat more helpful to compare condominiums in the same complex.
No. 6: Don't "sell your listing." A Realtor who proposes a pie-in-the-sky asking price might be trying to flatter you to win your business, only to push hard for a price reduction as soon as the ink is dry on the listing contract. This tactic, known in the realty business as "buying the listing," is a dangerous trap for sellers.
"Be careful that you don't try to talk yourself into liking the agent who came in with the highest estimate," Rogers says. "Go back to the Realtor you trust."
No. 7: Disregard irrelevancies. Bourne-Pirovic says the list of irrelevant factors that sellers use to justify inflated asking prices is long:
- Price you paid for your house isn't relevant
- The amount you want to net from the deal isn't relevant
- The price your house might have fetched five or six years ago isn't relevant
- The amount you've spent on repairs, maintenance and improvements isn't relevant
The value of a major renovation might be relevant, but only if your house was substantially upgraded. A new bathroom vanity doesn't count.
No. 8: Don't over-price. Sellers who push well beyond the likely sale price are "cruising for trouble," Rogers says, because a too-high price can turn into a price reduction.
"If the seller had to reduce the price in a hot market, it really looks tainted," he says. "Buyers will read into it that it's probably more over-priced than even that difference."
No. 9: Don't under-price. Deliberately under-pricing a home to try to attract more buyers is also risky.
"Buyers come in at an asking price because they guess or they've been told there is not another offer," Rogers says. "Pricing $10,000 lower, you are betting that there may be more than one buyer bidding."
Instead of your hoped-for bidding war, you might not receive any offers or you might get just one offer that's exactly equal to your artificially lowered asking price.
No. 10: Pick a number. Retailers like prices that end in 99 cents, but Bernard says a price that doesn't end in the predictable 00 or 99 is a smart strategy.
"I use weird numbers," she says. "My clients laugh at me, but it works. People call up and say, 'Why did you put that price?' So you would call me and ask, and now, I can tell you one-on-one about the property."
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Marcie Geffner is an award-winning freelance reporter, writer, editor and blogger whose work has been published by MSNBC, CNBC, Yahoo! Finance, Fox Business, Bankrate.com, AOL Real Estate, ThirdAge.com, Fidelity.com, Inman News and dozens of major U.S. newspapers. She holds a bachelor's degree in English from UCLA and MBA from Pepperdine University. You can follow Marcie on Twitter: @marciegeff.