Settling on the perfect price for your home sale can be a tough balancing act.
Price your house too high and you risk it languishing unsold on the market. But price it too low, and you could be cheating yourself out of thousands of dollars in the final deal. When determining a price, it’s important to do the research and legwork necessary to make sure you get the best price possible. Here’s what to consider when pricing your home.
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How to price your home
There are three basic steps you can take when setting an asking price. First, look at similar properties. Nearby houses that have sold and are similar to yours in terms of size, location and condition give you an idea of what your house might be worth. Look at how these houses are priced currently and how much they have sold for in the recent past.
If your house is priced higher than similar houses currently on the market, you’ll have a harder time competing for the attention of potential buyers. Pay attention to the sale price for comparable houses that have sold in the past few months; this can give you an idea of what buyers are actually willing to pay for homes in your market.
Next, study the local market. Using real estate search websites, take a survey of what houses of different sizes, styles and ages have historically sold for in your neighborhood and what they are selling for now. This should give you an idea of the housing market trends in your area and whether prices are currently moving up or down.
If prices are moving down, you might want to be more conservative with your asking price. If prices are going up, you may be able to ask for more.
Finally, get help from a real estate agent or an appraiser. A good real estate agent will already know what’s happening in your local market and can tell you what similar properties have sold for in your area. Similarly, you can hire a professional appraiser to help assign a value to your home.
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Why the perfect price matters
It’s important to set the right asking price for your home right out of the gate. Your home will likely get the most attention from potential buyers when it first hits the market. If your home is priced too high in the early stages, it’s less likely a buyer will make an offer. And the longer your home stays on the market, the greater the chance that potential buyers will assume something is wrong with it and will either skip it altogether or offer less than the asking price.
A high list price may limit your visibility online. Many prospective buyers scan potential listings online, filtering their search by setting upper and lower price limits along with other characteristics about the home, such as number of rooms and square footage. Your house won’t be part of that search if its priced too high relative to its other characteristics.
What’s more, if your asking price is higher than the home’s appraised value, that might interfere with the buyers’ ability to qualify for their mortgage. And if that happens, there’s little hope for the sale to move forward.
Adjust when necessary
If your house isn’t getting a lot of interest early on or if you hear from buyers that it’s priced too high, don’t hesitate to adjust the price. A swift reaction will help you capture some of the initial enthusiasm that comes with a newly listed property.