How to Price a Home to Sell
Whether you’re in a seller’s market like we’re experiencing right now, or a somewhat normal real estate market, pricing a home properly is key in order to get the outcome you want. If you’re unsure how to price a home to sell, I have a few ideas that I share with sellers during a listing presentation when we’re discussing placing their home on the market. Read through and then reach out if you have questions about the specific pricing of your home!
Pricing your home correctly right from the beginning is key in the real estate process. Your home will sell more quickly, and for a higher price, if you price it correctly from the start. Pricing it too high with plans to drop the price later automatically eliminates savvy buyers {and agents} that know the market value in your area … and when you drop the price down the road, those same savvy buyers will be leary of the long days on market. Pricing the house at the proper value will attract qualified buyers that take you seriously and it will reduce the risk of receiving a low offer {below market value} that comes because buyers know the home is overpriced.
The listing price is ultimately decided by the seller but when you’re hiring a real estate agent, you’re hiring them for their expertise and market knowledge. An agent will help you attract the greatest amount of buyers with an appropriately priced listing.
What Factors Determine the Sale Price of a Home?
There are many factors that go into determining the listing price of a home.
Recent sold comparables in your area give you an indication of the current market, average square footage price, and how quickly homes are moving at certain square footage prices. That same square footage price, if the houses are similar, can be applied to your home to give you a listing value.
Current market conditions also dictate listing price. While recent sold comparables will give you an idea of what’s happening {if the market is changing quickly} comps might not be entirely accurate. That said, my opinion is that it’s generally worth pricing according to recent comps and allowing the market {in a strong seller’s market} to push the price up with multiple and over-asking offers.
The condition of your home at the time of listing weighs heavily into the listing price. If the carpet is stained and worn, the house needs a coat of paint, and the home is heavily cluttered, you won’t be able to list for top dollar. When I meet with clients to discuss listing their property, I walk through the home and give advice on ways to increase the value. While you may not want to invest in a property that you’re leaving, a small investment {like paint and carpet} can draw more buyers, and ultimately increase the amount you get for your home.
Along those same lines, the features and upgrades you have in your home can affect the market value. An updated kitchen with quartz countertops and stainless steel appliances will usually draw a higher price than an outdated kitchen with oak cabinets and linoleum countertops.
The terms you offer in your contract can also affect the value of the home. If you’re providing an accurate survey, a buyer may offer more money, knowing that they won’t have to purchase a survey. The terms offered are directly affected by whether it’s a buyer’s or seller’s market.
The amount of competition you have in the market also factors into the list price. If your neighborhood is full of listings, many just like yours, you probably won’t be able to draw in top dollar on your home. On the flip side, if market inventory is low, houses can sell at a premium.
What Factors Don’t Determine the Price of a Home?
There are a few factors that sellers sometimes think should affect the price of their home but don’t.
The original purchase price of your home doesn’t matter when it comes to listing to sell. The hope is always that you can sell at a higher price than you bought but if you live in a depressed area, or the economy is in a slump, housing prices can drop. Fortunately, this is something that isn’t very common in the Dallas Fort Worth metroplex. The economy tends to remain pretty stable and property values either hold fairly steady or continue to climb, year after year, in many areas.
Listing price isn’t increased based on the cost of renovations or improvements you’ve made to your home. While improvements and upgrades can increase the listing price, as stated above, it isn’t a dollar for dollar translation. If you spend $40,000 on a kitchen upgrade, you likely won’t be able to increase the listing price by $40,000. If you’re thinking about improving your home in order to sell it, it’s a good idea to talk to an agent about what improvements will bring value.
What you think your home is worth really doesn’t matter when it comes to pricing a home to sell. A home is full of emotional ties and memories but when it comes time to put it on the market, it needs to be thought of as a product to sell. A house is only worth as much as a buyer is willing to pay.
And finally, the profit you would like to make on your home, after closing costs and the mortgage payoff, doesn’t factor in to the listing price. The goal, obviously, is to sell your house for the highest amount possible but it has to be priced according to market value, not the amount of money you owe.
Are you curious about how much your home is worth? I’d love to run a free, no-pressure comparative market analysis. Reach out to me via email at randi@repeatre.com.
