Set the Price
Learn how to study market trends and set the right price for your home
Review comparables of recently sold homes What is a Comparative Market Analysis (CMA)?If you’re working with a real estate agent, they’ll be providing you with a CMA, which is a compilation of recent sales from your area. It takes into consideration home details, days on the market, and final sale price.
Learn from other sellers’ mistakes Review expired listings from your area to gain insights on pricing your home to sell. Compare original list prices of recently sold homes with their final sale prices. Did it take many price cuts to get a sale? Perhaps it was overpriced to begin with?
Don’t let your asking price lump you in with the competition Ever heard of price banding? It’s the practice of looking over current inventory in your neighborhood and finding a less crowded price point. Prices tend to get bunched up as sellers try to price their homes competitively. For example, if there are four homes in your neighborhood priced between $274,000 and $276,000, and the next set of homes start at $290,000 and up, you should take advantage of the wide open $280,000 price band.
Avoid obscure and century pricing Whether at the grocery store or in a home sale, there’s a proven psychology that items priced just under a “century” number (meaning a nice, round number) are more attractive to buyers — think $9.95 instead of $10, $19.99 instead of $20, and so on. For whatever reason, your $299,999 home might seem more approachable than if it were priced at $300,000. However, pricing a house at a random and obscure number (like $123,456) is distracting to buyers and gives a bad impression of you, the seller.
Price for online search ranges Consider the price range your home will fall into on popular online real estate websites. Most buyers have a price range they are considering or can afford. A buyer looking at homes in the $280,000 to $300,000 range will likely not see your home if it’s listed at $305,000. But, if you choose a home listing price of $299,999, it’ll show up in their search results — and they just might end up being your buyer.
Put yourself in the buyer’s shoes It’s hard to put aside your emotional attachment to your home, but when selling your home, it’s a must. Look around at what else is selling around the same price. Objectively, are these homes worth more or less than yours?
A note on pricing for a bidding war There’s a difference between “How much can I list my house for?” and “How much can I sell my house for?” Sometimes, especially in big seller’s markets, sellers list their homes for an attractively low asking price, in hopes of driving up the eventual sales price with a bidding war. While this strategy can work, there’s always a risk of the financing falling through on your highest-priced offer, especially if your home doesn’t end up appraising for the offered amount. When that happens, you’ve jeopardized lower offers, and potential buyers may wonder if there’s a flaw in your home that made your deal fall through. When evaluating offers, always look carefully at all aspects of each offer before deciding which to accept — there are more factors than just the price offered.