The Importance of Pricing Your Home Right
Pricing your home is one of the most important aspects of selling it. Many things must be taken into consideration, from physical factors of your home, to market trends, to location, and much more. Why is it so important that you don’t over price or under price the property you ask? It’s quite simple really. Homes that are priced too high or too low when they first hit the market may scare away a potential buyer that may otherwise be interested. Your home will get the greatest amount of attention when it’s first listed for sale, it’s essential that you price it correctly and enter with a solid plan in mind so that you aren’t wasting those valuable days.
Priced Too High
A couple of things can come from pricing your home too high above the market value. You can potentially get very little or even ZERO showings. If no one is viewing your home, then guess what? No one will be buying it.
If you’ve ever searched for a home online, you most likely have seen the different filters in place. Potential buyers and their REALTORS will likely only be looking at homes priced within their budget. Your homes market value may be in their budget, but because you have overpriced it, they will not even know that it’s on the market!
You could also experience the exact opposite. You may see that there is a great deal of showings, but still no offers. This could be because other home seller’s and listing agents are using your home as a starting point for their property. They may be considering entering the market, and your home is comparable to theirs, so they are looking at differences and similarities. This may make you feel like either someone isn’t doing their job selling the property, or it’s got to do with the market. But make no doubt about it, it’s more than likely, because it’s priced too high.
Let’s say you find someone crazy enough to submit an offer for your overpriced home. The majority of home buyers leverage lenders such as banks to fund the purchase of their properties. When the time comes for that lender to provide the funds, they will take a look at the home it’s funding, and if they deem the price too high, they may withdraw their funds for that deal! This will be a huge waste to your time and expectations.
Priced Too Low
This one should be very obvious. If you price your home too low, you will likely sell it for lower than it’s worth, thus losing out on profits. Also to keep in mind again, those price filters could be pushing potential buyers away, and making it hard for you to get enough showings to sell. They may not see it because of the way their filters are set, or maybe they will dismiss it, because they assume there is something wrong with the property.
There are situations however, where listing your property at a price lower than market value can lead to a multiple offer situation, leading to a bidding war. This situation however, would only occur where the market is hot, the location is desirable, and your REALTOR has done a good job and effectively marketed the property!
So what now? What do you have to take into consideration when trying to pick a price? Like I said earlier, there are many things that affect the value of your home. Here is a quick list of some of the major aspects to consider; market trends, comparative properties that have sold within a reasonable amount of time, similar properties that are currently listed and would be competing with yours, and finally, your motivations for selling the property. Are you looking to sell as quick as possible? Are you willing to have the property listed for longer, but want to catch the market as it’s growing and sell it for a larger profit? If you are working with a professional realtor who has a solid understanding of home valuations, they will take all of these things into consideration when coming up with a potential price for you. Don’t be shy, ask them to explain why and how they came up with their valuation, and if they aren’t able to provide you with a reasonable explanation backed up with facts, then…you have a decision to make.
If you’re interested in reading about the different inexpensive things you can do to improve the price of your home, make sure to read our blog on Inexpensive Home Upgrades.