ESTABLISHING THE SELLING PRICE FOR YOUR HOME
TWO CRITICAL GUIDELINES FOR PRICING A HOME
1. DO NOT PRICE TOO HIGH FROM THE START: Statistics show that homes priced correctly when they first hit the market sell FASTER and CLOSER to the ASKING PRICE than homes that start too high, then have to adjust downward.
2. DO NOT PRICE YOUR HOME BASED ON "ACTIVE" OR "PENDING" LISTINGS: Use actual SOLDS for a true pricing guide. A home can be listed for any amount. Home appraisers only use SOLD listings as comps.
HOW TO PRICE YOUR HOME CORRECTLY
Many homeowners want to set their list price based on what they paid for their home, the balance of their mortgage, or on the profit they want to make so they can move into another home. In reality, your home is worth only what the market will bear. If you price your home too high, some potential buyers won’t want to look at it at all, while others will simply walk away without making an offer. All a buyer cares about is paying the fair market value. There is nothing that will blow up in your face quicker than an overpriced property. In fact, overpricing a home is right at the top of the list for reasons why a home does not sell.
AVOID AGENTS WHO WANT TO "BUY YOUR LISTING"
BY OVERPRICING YOUR HOME
If you’re interviewing several agents to choose a listing agent, you may be tempted to pick the agent who suggests the highest price for your property (in fact, that agent who is "buying your listing" could be guilty of MISREPRESENTATION). Sellers, like buyers, need to beware. The agent who provides the best comparative market analysis and explanation of how your home should be priced will be more likely to sell your home quicker and for a higher price than someone who tells you only what you want to hear.
IMPORTANCE OF A QUALITY COMPARATIVE MARKET ANALYSIS
A comparative market analysis should include sales prices for similar nearby homes that sold in the last month or so. In addition, many REALTORS include prices for homes currently on the market that will be your competition, as well as homes taken off the market because they didn’t sell. Other data REALTORS® can use to suggest a price range include how many days homes were on the market at various price points and the average difference between the list prices and sale prices on homes that have sold.
Your REALTOR® can help you estimate who might want to buy your house and what else those buyers are looking at so you can measure your price against the competition.
IMPORTANCE OF USING A REALTOR® WITH PROVEN SALES & EXPERIENCE
A knowledgeable REALTOR® can factor in all of these issues in the context of your local market conditions, including whether home prices are rising or falling and whether it’s a buyer’s or seller’s market.
Choose the right professional to help you with your home sale and then listen to your REALTOR®'S advice and your transaction is more likely to go through quickly and smoothly from the beginning.
BEWARE OF THESE TWO DISHONEST "GIMMICKS" SOME AGENTS USE
“I actually have a buyer client that would be interested in your home, so you should list with me!”: Good client relationships cannot be built on falsehoods, and when you realize that the agent has been less than truthful to you, the agent’s credibility is gone.
“If I can’t sell your home in XX days, I’ll buy it myself!*”: Note the asterik (*)! This gimmick has been circulating for years as well, and the “fine print and conditions” gets the real estate agent out of buying your home unless you accept the agent's offer of FAR BELOW market value with possible other conditions as well (such as REQUIRING you to buy one of their OWN listings)! The TRUTH (do a Google search to prove this) is that almost NO agents actually end up buying your home!
REALTORS® don't establish value, the market does.
PLEASE REALIZE THAT IN A WAY EACH HOME MUST BE SOLD TWICE, once to a buyer and a second time to an appraiser who represents the bank that will grant the purchaser a mortgage to buy the home (unless it is an all-cash purchase).
BOTTOM LINE: The value of your property is determined by what a ready, willing, and able buyer will pay for it in the open market, which will be based upon the value of other recent CLOSED sales of similar sized homes in the nearby neighborhood. BUYERS FIRST DETERMINE VALUE WITH THEIR OFFER AND THIS VALUE IS "FINALIZED" (OR REJECTED) BY THEIR LENDER'S APPRAISER (UNLESS THE BUYER PAYS CASH AND DOES NOT NEED A LOAN).
Do NOT Rely On Zillow, Trulia, Or RedFin
For Accurate Home Values!
Zillow's "ZESTIMATE", according to a 2017 "real world" data using 5,000 homes, is only accurate within 3% of the home's true value only 29% of the time (and even this 3% variation is huge... 3% variation on a $500,000 home is $15,000!).
Redfin's 2017 results are "better" than Zillow's yet the overall RESULTS are still very poor for ALL "online home evaluation" companies! Only a REALTOR® or a home appraiser can provide much more accurate values.
There are TWO major factors in selling your home: PRICE and EFFECTIVE MARKETING.
80% is how your home is priced and 20% is effectively marketing your property to buyers and other real estate agents.
Because your home is not the only one on the market, pricing it comparably to the market is vital to getting it sold.
We CANNOT control:
We CAN control:
CONDITION OF YOUR HOME
Activity vs. Timing
This chart highlights the importance of pricing correctly at market value.
This chart illustrates the level of excitement and interest in a new listing over time. It also demonstrates the importance of pricing correctly. When a property is first listed, it generates a very high level of interest from prospective buyers, which reduces dramatically over time. It is important to be priced correctly from the beginning, during the peak of this curve.
The BEST DAY TO SELL your home is the FIRST day it's on the market! The NEXT BEST DAY to sell your home is the SECOND day it's on the market. So you see your best chance of selling your home is in the FIRST THREE TO FOUR WEEKS of marketing. Your home is fresh and exciting to buyers and to their agents. If you don't get many showings or offers, you have probably overpriced your home, and it is not comparing well to the competition. Since you can't change the location, you will have to improve the homes's condition or lower the price.