Pricing it Right
Thinking about selling your home? How do you know what pricing strategy to use? Unlike many sales endeavors where you price high and haggle your way to happiness, real estate is a whole different world. In the U.S., the vast majority of homeowners own just one property. Meaning when you are buying or selling, you're handling what is often the largest financial investment for most people—one that also holds significant emotional value.
Selling Your Property: It's Not Your 2004 Toyota Camry!
Selling a house is not like haggling over your trusty 2004 Toyota Camry. While you might think pricing high and negotiating down is the way to go, it's actually a recipe for confusion in the real estate world. Unlike a car, a house is the average consumer's biggest financial investment. Consider this: the average car price in the U.S. is about $48,000, while the average home price is $420,000. So, while someone might stretch their car budget by 10-20% to snag their dream ride, a house budget is more like a strict diet.
When buyers get pre-approved for $500,000, that's their ceiling, and that's what shows up in their search results. So, if you're playing the negotiation game and pricing your $500,000 house at $525,000, guess what? They're off checking out other properties while you're left wondering where all the buyers went! You might be curious about cash buyers? It is important to consider all types of buyers, including cash buyers. Although they aren't restricted by bank limitations on their spending, it doesn't mean they are indiscriminate with their money. Like other buyers, they are also seeking a good deal.
How to price a property for maximum return:
#1 - Run Comparables: Have your real estate professional review all similar properties in your area and their recent sale prices. The more recent the sales, the better. Understanding what similar homes in your neighborhood have sold for provides a clear picture of your home's value. For example, if a similar home two blocks away sold for $600,000, but your kitchen is completely remodeled while theirs was original, we can assess the added value your remodeled kitchen contributes to your home's total value.
#2 - Evaluate the Competition: Examine the properties in your neighborhood and their listed sale prices. Buyers interested in your area will also view these homes, making them your direct competition. It is vital to consider the competition when pricing.
#3 - Price Just Below Market Value: Once you've completed the research from the previous steps, aim to set your price point just below market value to remain competitive with other homes on the market. I understand this might feel daunting, as your property is likely your largest financial investment. However, real estate is a numbers game. The more buyers who visit your home, the higher the chance of receiving offers, potentially even multiple offers. It's like throwing a party and inviting everyone to join the fun. By pricing just under value, you create a buzz that can lead to multiple offers. In fact, two of my latest listings, featured right here in this newsletter, were perfectly priced and attracted multiple offers above the list price, surpassing my sellers' expectations. Both properties went under contract in just 4 days or less.
Bottom Line
You might be tempted to price it high, thinking you'll leave room for a little haggling. But beware! This strategy can backfire, leaving your home languishing on the market longer and potentially fetching a lower sales price. So, let's aim for a price that's just that drives buyers to your door and offers to your inbox!