Pricing Your Home

Pricing your home is both an art and a science. Achieving the optimal price is the result of both objective research into comparable properties and a gut feeling about your property and the current market.

In most cases, owners are emotionally attached to their homes and it's very difficult for them to calculate an accurate market value.  Realtors and appraisers, however, can and do take an objective view of the home's features, compare it to other properties recently sold, and can help you arrive at a realistic market price.

The right price should:

  • Attract buyers
  • Allow you to earn the most money possible
  • Help you sell as quickly as possible

The simple fact is, price is the number one factor that most homebuyers use to determine which homes they want to view. And it's important to remember that, although the price is set by you, the market value of the home is determined by the current market and the buyer. Try to avoid allowing your enthusiasm to impact your better judgment - overpricing is a common mistake that can cost you in the end!

The Importance of Proper Pricing

  • Faster sale and less inconvenience
  • Exposure to more buyers
  • Increases realtor response
  • Generates more advertising/sign calls
  • Attracts higher offers
  • Means more money to seller
  • Avoids being "shopworn"
  • Helps your home "compete" well with other homes in the same range, getting you offers!

What really matters is how your home stacks up against the others currently offered for sale and recently sold in your neighborhood. Buyers will be comparing.

Common Reasons for Overpricing

  • Over-improvement.  You may have improved your home beyond the neighborhood norm.  There's nothing wrong with doing something that you enjoyed, but a Buyer may not be willing to risk paying a price well above the neighborhood average, no matter how nice a home may be.
  • Need a certain amount of money for next home, or to pay off mortgage.  This matters a lot to the Seller, but unfortunately it doesn't affect what the home is really worth.
  • Purchasing in higher-priced area.  Same as above.
  • Original purchase price too high.  This is a hard mistake to overcome, but the best strategy is to work with your Realtor and follow advice about staging/getting the best possible price for your home.
  • Lack of factual data, or the Seller simply may not know how to interpret information from the many internet "Portal" sites.
  • Bargaining room.  If reasonably priced to start with, most homes will sell for 96-98% of asking price.  Sometimes, Sellers think that a high price leaves them more room to bargain.  In reality, a too-high price means we won't get any offers at all.
  • Move isn't necessary.  If a Sellers doesn't really want or need to move, their price is often set higher than the market will pay.
  • Assessed value
  • Emotional attachment
  • Opinion of family and neighbors.  Once again, it's best to trust your Realtor to help establish a reasonable market price which will get you "into the market".  In certain cases, we will also recommend hiring an appraiser for another, objective opinion of value.

Dangers of Overpricing

  • Most of the activity on your home will occur in the first few weeks. Pricing a home properly and then creating immediate urgency in the minds of agents and buyers is critical.
  • Buyers who have seen most available homes in their price range are waiting for the "right house" to come on the market. That's why if a house is priced right, it will sell quickly. The buyers are there waiting for it.
  • Don't start with a high price and the assumption that you can reduce it later. By the time you decide to lower the price, interest will have already waned.
  • A major cause for concern is appraisal problems; overpricing can lead to loan rejections and lost time.
  • Even if your home is nicer than most, your house won't be picked for viewing if you set the price too high. 
  • Buyers and agents are hesitant to make an offer because they fear something is wrong with the property, or they will make offers far below your asking price.
  • Fewer potentially qualified buyers will respond.
  • You might help sell similar homes that are priced right, as they will look like a better value than yours.
  • You could lose money as a result of making extra mortgage payments while incurring taxes, insurance and unplanned maintenance costs.

The Role of a Real Estate Agent in Pricing

  • Provide you with a comparative market analysis (CMA), a comparison of the prices of recently sold homes that are similar in terms of location, style, and amenities.
  • We don't tell you what we think your home is "worth"-- we help you understand what the market may be willing to pay for it.
  • The market determines value…together we determine the price.
  • Price depends on many factors you control:
        - Marketing time - if you want a quick sale, price lower than the competition
        - Financing alternatives provided
        - Condition.  Top condition will lead to a quicker sale.  Most Buyers today don't want to renovate. 
       -  Exposure method .. Use a Realtor that will provide maximum exposure to your home!
  • Keep in touch with market trends and keep up to date with market activity of comparable homes.
  • Estimate your net proceeds.
  • Help to determine offering incentives.

An agent has NO control over the market, only the marketing plan. Never select an agent based on price. Some agents will actually take a home at a price where they know it will never sell, just for the free advertising of their sign in the yard!

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