How NOT to Price a Home

Posted by Kent Braaten on Tuesday, June 9th, 2020 at 12:49pm.

There are many factors to consider when selling a home, from marketing to offer negotiations, but the most important of all is, without a doubt, the price. The price is the first impression that buyers get of a home, before they even look at the photos or the listing details, because it is the limitations of their budget that narrows their search. That’s why ensuring that your home is priced accurately and fairly from the start is key in guaranteeing a smooth and timely sale. So, in order to do so, you’ll want to avoid these common home pricing mistakes:

Pricing With No Research

If selling a house was as simple as pricing from the heart, the world of real estate would be a much simpler place. But, as we all know, this is not the case. When it comes to pricing a home for sale, it is crucial to take cold hard facts from the local market statistics and actual sales to make a data-driven decision that accurately determines the home’s actual market value based on what buyers are willing to pay today.

Data you’ll want to research before pricing your home to sell should include actual sales data from comparable homes in your area, as well as average list-to-sale price ratios. These will give you a realistic idea of what actual sales in your neighborhood have been, and an understanding of what buyers are looking for in terms of prices for homes similar to yours. Just as important, you’ll also want to look at unsold homes in the area, too. This can be useful in determining certain pricing trends to avoid that may have prevented buyer interest, like overpricing.

Pricing Based on Neighbour or Friend’s Listing Price

Many buyers fall prey to the common misconception that their home will sell for the same as their neighbours or their friends who may own a similar home. The reality is, though, that every house is as different and unique as the families that live within them. While your neighbour’s home might be just next door, it could be a completely different build than yours, with more attractive upgrades or additions than your own, or vice versa! The same goes for your friend or family member’s home—it may have the exact same number of bedrooms and bathrooms, but the neighborhood you live in may be more or less desirable than theirs. 

It’s important to remember that your home, while it may look or seem similar at face-value, likely will not perfectly match up with others on the market. Pricing should be customized specifically for your property each and every time you sell based on multiple comparisons, not just one or two. 

Hiring the REALTOR® That Offers the Highest Listing Price

When choosing the right REALTOR® for you, one of the most important things as a seller is to ask for a custom home valuation to see what that agent thinks your home should be listed at. And if you are interviewing multiple agents, you may notice that their idea of pricing may be slightly different—sometimes even vastly different, which should indicate a red flag. 

While it may sound nice to list $20-30,000 more than the other REALTORS® recommended, it’s important to be wary of agents that may try to poach the listing by offering the most attractive sale price. Overpricing can be devastating to a listing, leading to more days on the market, more time and and money and money spent for you, and constant price reductions that could indicate trouble for a buyer. 

Always ask every real estate agent about the comparable sales data they used to reach that price, and don’t be afraid to request a paper copy of their comparative market analysis for your records. Ask them to justify the price they believe to be right and if they can’t provide a solid argument, don’t be afraid to walk away.

Emotional Pricing

Over the past number of years in your home, you have developed a stockpile of experiences, memories, and emotions related to your house, which may add value in your eyes. But remember: buyers don’t have those same feelings. Your home is a totally new territory for them—a blank canvas for them to start fresh. So the added value you might feel is right, will be entirely lost on them. 

This is where the opinion of an unbiased third party, like a knowledgeable and experienced local real estate professional can be incredibly helpful. They are able to see your home at face-value without any emotions tied to it to set reasonable expectations for what your listing price should actually be for buyers to show interest.

 

Don’t let overpricing get the best of you and your property. By avoiding these common pricing mistakes and enlisting the help of an experienced local REALTOR®, you can be sure to get the quickest, simplest sale with the best price possible in today’s market!

For more information on selling your home or to request a free custom home valuation, contact me today!

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