How to Price Your Home
It’s the single most important factor you’ll need to keep in mind when selling your home: what to price it at. Too high and the house won’t sell. Too low and you won’t achieve as much as the house is worth. But you also need to remember that pricing is all about what people are willing to pay for your house. Whether you think your home is worth $250,000 doesn’t really matter – what really matters is whether a buyer is willing to give you $250,000 for it. Whether you’ve put lots of work and energy into the home or whether you’ve done lots of construction is besides the point in a buyer’s market, and so it’s not advisable for you to add tens of thousands to the asking price to pay for that work. Instead, you need to think of a combination of factors when deciding on the price.
Look at Comparable Properties
We offer a comparable property service here at Real Estate Unravelled. It’s one of the easiest ways to see how your home fares against other properties in the local area. Use comparable properties to your advantage by:
- Looking at each similar home in a ½ mile radius that sold within the last six months
- Comparing homes with a similar square footage of plus or minus 10%
- Comparing homes of similar ages
- Comparing homes within the same area – many neighborhoods have “dividing lines” and you should always compare properties from the same side of town, so to speak
Look at the Market
You’ll also need to analyze the market in your local area. Who is buying properties? Who is selling them? Who is your competition? How much are they asking for? You also need to analyze the location of your hometown and how it may affect your pricing. For example, homes in the centre of a city will attract more buyers and therefore more money. Homes that are rural with views will also attract more money. Homes in areas that have a lot of similar properties, where buyers can afford to shop around for a bargain, should be priced lower to reflect that. Think clearly about your competition and whether you should price your home slightly lower than comparable properties – or slightly higher to show that the finish of your property is of a higher quality.
Check Out Withdrawn Properties
Instead of just checking out the properties that did sell, it’s also important to check out the properties that have been withdrawn from sale and that have expired – as well as properties that might have sold subject to contract only to fall at the final hurdle. Why did these homes get withdrawn? Was it to do with the pricing or the condition of the property? It’s important to get as much information about this as you can.
Consider Strategic Pricing
Get to know the market and whether it is neutral, a buyer’s market or a seller’s market. If the market is dropping by approximately 1% every month and you want to sell within about three months, drop the price by 3% to start with – that way, the property will be competitively priced and you’re more likely to sell than the guy who drops his price each month. If this is your strategy, tread with caution: if the market picks up, it isn’t that easy to raise your price – prospective buyers might remember your property being listed at a lower price and will likely offer the lower price, rather than the new price.
Get Out There
Instead of just viewing homes on the internet, get out there and organize a few property viewings. The only way to truly get to grips with your competition is to get out there and look at it, as you’ll be able to see why comparable homes have been priced in a certain way. If other homes in your area have a better finish yet are on the market for the same price as yours, you might need to adjust your price. But if comparable homes are on the market for a higher price than yours, you might just trump the competition. See which houses are getting the most views, note what you like about them and what you don’t like – and try to recreate that feeling inside your own home.
Pricing is part art and part science, but you will get there – it just takes a little research. Remember though that an optimistic price is better than a bargain price – and you can always drop the price, much more easily than you can raise the price.