This guide to pricing your home to sell fast is applicable whether you are working with an agent or plan to do a for sale by owner.
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How to Price Your Home to Sell Fast
This is perhaps the most discussed aspect of listing a home for sale. When selling your home, pricing it right is extremely important. Making a mistake by pricing your home incorrectly can truly make or break whether or not your house gets sold quickly, or sold at all. The first thing to understand here is that the home must get exposure in the form of showings in order to get any offers. After all, who buys a home without touring it? The 2nd thing to understand is that in the world of residential real estate the value of a home is determined by what someone is willing to pay for it on the open market. How do agents determine what a home would sell for on the open market? The answer is that we look at what comparable (called comps in real estate lingo) homes have sold for in the area taking into account features such as; Square footage, number of beds and baths, lot size, landscaping, flooring materials, countertop materials (granite or laminate?), cabinet sizes and quality, and more. This allows us to price the home correctly, for a quick sale. This process is often called “Comparable Market Analysis” or “CMA” for short. This is similar to the methods that appraisers use to determine an exact value (we will get into this in another post).
Nearly all home buyers today start their search on the internet. Buyers and agents filter out parameters of the ideal home that they’re looking for in online search portals that access the MLS (multiple listing service). In browsing through these listings, we will find listings priced in 3 different categories.
Overpricing: You want the most money possible for your house, right?! Not so fast… If your home is not priced in the range of other comparable houses, you will get little to no showings. Even if you do get some showings and get an offer, the offer would commonly be a low-ball offer because people think you’re in “dreamland” on your price. They will automatically think that it will be hard to get you to come down to what the home is really worth. This does not set the stage for a smooth negotiation that ultimately results in a SOLD sign. Which is exactly what you don’t want, the hindering of your sale. Also, the longer a house is on the market (days on market), the lower the sale price will likely be.
Result: A long time on the market, little to no showings, may sell.
Pricing at Market Value: Good for you! You are making the right move by pricing your home correctly. In looking at the comps you decided to assign a listing price that is directly in line with the comparable homes that have sold. Pricing your home right sends a message to buyers that you are reasonable to deal with, and ready to move.
Result: Average time on market, sold at market value.
Pricing Below Market Value: Need a sold sign really fast? Price it below the comps. There will be a lot more showings this way, and you will likely get offers above your asking price. Why is this? Because the buyer’s agent will run the comps when helping the buyer make an offer, and will discover that the house is actually under priced. They will know that there will be lots of offers, and by making a market value offer(or maybe even higher)- the buyer stands a higher chance of getting the house.
Result: Shortened days on market, lots of showings, sold at market value.
Things to remember:
- It’s always up to you to accept an offer or not. Just because you receive an offer, that doesn’t mean you have to accept it. You can always decline the offer, counter the offer, or accept it.
- Your agent is in the business of getting your home sold. Make sure to listen to him or her when they are going over pricing and the comps for your home. Remember that the more money they sell it for, the more they make too!
- It’s almost always better to reduce the price that you’ve listed your house for rather than raise it. Price reductions are good because it makes your home “pop back up” on the search tools that buyers are using. It also sends the message to potential buyers that you’re serious about getting your home sold.
If you are looking to buy or sell a home in the Phoenix area, you should contact a reputable, reliable agent with a proven track record. Ryan Welch and his team are always here to help and can be reached at 480-356-3197