4 things savvy home
sellers do when pricing their homes.
Home pricing is more
of a science than an art, but many homeowners price with their heartstrings
instead of cold, hard data.
Smart sellers know
that crunching the numbers is always the better route to an accurate home
price. Here’s how they do it.
Homeowners often think
that it’s OK to overprice at first, because — who knows? — maybe you’ll just
get what you’re asking for. Although you can certainly lower an inflated price
later, you’ll sacrifice a lot in the process.
Just ask Candace. She originally
listed her home for $529,000, but “eventually had to accept the market reality”
and chop $40,000 off the price. The
home’s location proved challenging: Buyers were either turned off by the area or
unable to afford the home.
The most obvious
pitfall: A house that remains on the market for months can prevent you from
moving into your dream home. Already purchased that next home? You might saddle
yourself with two mortgages.
You lose a lot of time
and money if you don’t price it right. And
worse: Continually lowering the price could turn off potential buyers who might
start wondering just what is wrong with
your home.
Today’s Buyers are
smart and educated, if you’re not priced right in the beginning you’re probably
going to lose them.
It’s easy for
homeowners to stumble into two common traps:
Conflating
actual value with sentimental value — how much they assume their
home’s worth because they lived there and loved the time they spent there. Or,
Assuming
renovations should result in a dollar-for-dollar increase in the selling price — or more.
Many homeowners think
if they put in a few thousand dollars worth of new flooring, for example, they
might overestimate the upgrade’s impact on the home’s value into the tens of
thousands. Candace’s Texas home came
with a built-in renovation trap: It was already the nicest home in the area,
making it harder to sell. Major additions had inflated the square footage — and
the price, according to one appraiser — without accounting for the surrounding
neighborhood. That created a disconnect for buyers: Wealthier ones who might be
interested in the upgraded home disliked the neighborhood, and less affluent
buyers couldn’t afford the asking price.
Don’t buy the largest or nicest home on the block is common real estate
advice for this reason.
That’s not to say that
renovations aren’t worth it. You want to enjoy your home while you’re in it. Smart renovations make your home more
comfortable and functional but should typically reflect the neighborhood. A
REALTOR® can help you understand what certain
upgrades can recoup when you sell and which appeal to buyers.
Another culprit for
many a mispriced home is online tools, like Zillow’s “Zestimate,” that
prescribe an estimated market value based on local data.
The estimate is often
wildly inaccurate. A Virginia-area real estate company, McEnearney &
Associates, has compared actual sold prices with predicted online estimates for
several hundred homes in the area for the past few years and concluded the
predictions failed half of the time.
The best pricing
strategy? Consult a real estate agent, who will use something called comps
(also known as “comparable sales”) to determine the appropriate listing price.
They’re not just looking at your neighbors; they’re seeking out near-identical
homes with similar floor plans, square footage, and amenities that sold in the
last few months.
Once they’ve assembled
a list of similar homes (and the real prices buyers paid), they can make an
accurate estimate of what you can expect to receive for your home. If a
three-bedroom bungalow with granite countertops down the block sold for
$359,000, expecting more from your own three-bedroom bungalow with granite
countertops is a pipe dream.
After crunching the
data, they’ll work with you to determine a fair price that’ll entice buyers.
The number might be less than you hoped for and expect, but listing your home
correctly — not idealistically — is a sure way to avoid the aches and pains of
a long, drawn-out listing that just won’t sell.
Once your home is on
the market, you’ll start accumulating another set of data that will serve as
the ultimate price test: “how buyers react”.
There’s an easy way to
tell if you’ve priced too high: “If we have no showings, it’s way too high.
Lots of showings and no offer means you’ve marketed well — but it’s overpriced
once people get inside.” I’ve heard it
put another way: “No showings = Agents
think it’s priced too high” & “Lots of Showings with no offers = Buyers
think it’s priced too high”
When it comes to
finding a buyer, pricing your home according to data — and the right data, at
that — is crucial to making the sale.
Source: JAMIE WIEBE of Houselogic
Compliments of:
Julius F Zatopek III – Broker
Zatopek Properties
Notices:
