Setting the right asking price when it comes to selling your home is never easy and even the professionals struggle sometimes. Pricing too high can result in your home sitting on the market for months and lose the freshness of the home's appeal after the first two to three weeks of showings. Homeowners fantasize an ideal list price for their home even though it does not align with the current real estate market. On the other hand, if you go too low you could be losing out on thousands of dollars.
It takes a thorough understanding of several factors and variables in order to hit the mark.
1. Neighborhood Comps
One of the best indicators of your home’s value is the sale prices of similar homes in your neighborhood that have sold recently.
- Compare similar square footage within a 10% variance up or down, if possible
- Compare similar ages
- Have been listed within the last 3 months
Your real estate agent will tell you if your home can be priced higher than the comps in your area. Typically, you can get away with pricing your home higher than the comps when it has one or more of the following things:
- More bedrooms or bathrooms
- Added features such as an attached garage, a finished basement, or master suite
- Larger lot size
- Low market competition
Take another look at the comparable homes in your neighbourhood. If you receive a lowball offer and the comps are significantly higher, you have reasonable justification to counter back.
Put yourself in the buyer’s shoes. It is 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. Are these homes worth more or less than yours? 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?
Pricing a house at a random and obscure number is distracting to buyers and gives a bad impression of you, the seller. Though it is not advisable to initially list your house at a high price and then cut the rates but sometimes even with the best research, you will come to the conclusion that you have listed too high. Luckily, it’s not unusual to see price cuts. The key is to recognize quickly that you have overpriced and make an accurate adjustment.
Listen to the advice of a real estate agent. Your real estate agent is there to help you through tough negotiations. They can tell you how much your home is worth, when to counter back, and when to walk away.
Spring & Summers are a good time to put your house on sale as people tend to move during this period. You can price your house slightly high during this period. Winter is the slowest period, both because of bad weather and holiday season.
Consider the basics of supply and demand. Do a complete research to check the inventory available in your area. If your home is one of 20 for sale in your neighbourhood, you will have a tough time getting the price you want, since supply outweighs demand. But, if it is a hot market and you are one of just a few homes available in your area, you may be able to get your asking price, or even higher.
4. Buyer’s Market
In a buyer’s market, you need to be priced slightly lower than the competition, because there are more homes for sale than there are buyers in the market.
5. Seller’s Market
In a seller’s market, it’s possible that you could increase your list price above recent comparable sales, since inventory is limited and buyers are competing for fewer homes.
6. Balanced Market
In a balanced real estate market, there is a good balance between the number of buyers and the number of homes for sale. In this market, you will want to keep an eye on nearby comparable to make sure your pricing is similar Consider the above factors to help you price your home right.