Determining an estimated value of your home based on comparable sold properties is one thing. Implementing a successful pricing strategy is another. The first thing to do when determining a pricing strategy is to think of what is going through a buyer’s mind when shopping for a house. When you step into the buyer’s shoes, you will have a better understanding of how your house compares to the competition.
Some key questions to ask are as follows. Are there a lot of similar houses to choose from nearby or is inventory limited? Are the other houses that are for sale in better or worse condition than yours? And How does your home’s location and features compare to the others?
Let’s go into detail on how exactly these situations should change your pricing strategy.
With limited inventory, some people think they can just price the house at whatever they want, but the reality is that it depends quite a bit on the price range. If your home is immaculate and worth around $230k, you are mostly going to be dealing with first time home buyers. This means, the vast majority of buyers for your home will be getting a mortgage like FHA or VA and your home will need to pass an appraisal. In an extremely hot market, where you can possibly sell for $5-15k over appraisal, it really will not help you to list for $20-30k over what you think it is worth. In this situation, we have been very successful simply listing this home for $230k to invite multiple bids in which buyers bid up the price to the absolute most they are willing to pay over appraisal.
In the same market with a house that is worth say $500k, you can absolutely shoot for the stars. Asking for $50k more than you think it is worth could pay off if your house is the only one on the market with the features a $500k homebuyer is looking for. These buyers more often are putting a lot more money down and might be willing to go far over the appraised value for the only home on the market that fits their desires.
When you face heavy competition or your home simply is not quite as nice as the ones nearby, you should focus on pricing to sell. This means that you should settle on a listing price that makes buyers think twice about buying the house down the street just because it is nicer. Let’s say you and your neighbors have the same model house but theirs is updated inside and your house needs a new roof and has an old AC. Price your home for $5-10k less than your neighbors and you can bet the neighbors house will sell first and you might face a needed price drop a few weeks later. It is hard, but you need to be realistic and realize that for someone to buy your house over the neighbors is going to require a decent price difference. You will generally need to list for $15k to even $25k less than the neighbors to really be a contender in the buyers’ minds.
Before you list your home for sale, choose an agent with an intimate knowledge of the market. Use a J&J Realtor once and you will never want to go anywhere else when selling a house. Give us a call or fill out the form here to get started.
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