Your Home’s Listing Price
Finalizing your home’s listing price may be the most important aspect of it selling, regardless of all of the hard work you’ve done leading up to this crucial decision. It can be stressful and it can also be hard for everyone involved to agree! Luckily, there are factors that you can use to help guide you through this process. Before you know it, you’ll have a great listing price and an offer on the table in no time!
(Determining your home’s listing price.)
1. Look at Comparable Listings and Sales
What have similar homes in your area been listed and sold for over the last three months? Your real estate agent will create a Comparative Market Analysis (CMA), which will compile recent sales and take items into consideration which are discussed below. If you live in an urban area, you should focus on homes between 1/4 and 1/2 mile away. If you live in a rural area, focus on homes that are as close to your home as possible, while still in a comparable price range. You’ll also want to focus on homes that have similar square footage and are of a similar age. Homes that are decades old will vary from relatively new constructions. Make sure you’re comparing apples to apples!
Specifically, you’ll want to assess the following:
You will want to examine the original listing price compared to the final sales price to see how much the price was reduced. Once you see what has sold successfully, you can adjust your price accordingly. This can be based on things like lot size and different amenities your property may include.
Withdrawn and Expired Listings
Look to see why these homes didn’t end up selling. Are there common factors such as the same real estate agency? See if you can take steps to avoid having your home fall into an expired listing and learn from other people’s mistakes.
Because these are pending, you won’t know the sales price until the transaction closes. But, try calling the listing agent and ask them to tell you! Some may, some may not. But even if you don’t find out, check out how long the listing was on the market. This may give you insight into how long it may take you to sell your house.
These are what you are ultimately up against! Buyers may have priced their homes too high or too low. Therefore, keep in mind that just because a house is listed for a certain amount, doesn’t mean it will sell for that amount! If possible, tour these homes. Do some comparisons on what your home has compared to these listings. Also, take a moment to note how these homes are staged
. Does your own home feel as inviting when a potential buyer walks in? Ultimately, you’ll have to decide if a buyer would rather own your home over any of the ones that are currently active. You may have to adjust your price accordingly.
Once you’ve done this research, analyze everything based on the current market conditions. The Balance
talks about comparing your home with three different prices, depending on how the market is doing. If comparable sales in your neighborhood were $250,000 and the market is currently balanced between buyers and sellers, you may look at asking around $254,500 and settle on $250,000. However, in a buyer’s market, you might price your house at $249,900, settling for $245,000. In comparison, in a seller’s market where there is little inventory for the buyers to choose from, you have the power to perhaps sell it at $265,000 or more.
Finely Tune Your Home’s Listing Price
Keep in mind, if you go too high above comparable pricing, your home won’t likely appraise and it may be tough for the buyer to get financing. If there are many cash buyers in the marketplace, this may not be as big of a concern. As always, you should make sure to hire an excellent real estate agent, finely tuned into your specific home type in your specific neighborhood. Finding these exceptional agents is our specialty and you can make your request here
. Knowing the market is imperative to deciding on your home’s listing price.
A Note on Aggregation Services like Zillow, Trulia, and others…
Browsing an online aggregation service like Zillow or Trulia is perfectly fine to do. If you haven’t been in the home selling market for years, this can be a good first step to get some ballpark pricing on your home sale.
Keep in mind, the pricing you see is not the same as a CMA as described above. Only a real estate agent specialized in your type of home, in your neighborhood, can determine the accurate pricing found in a CMA. This is because some home sales are not “arms length,” which means there is more to the story than meets the eye on Zillow or Trulia.
Details that a Professional Real Estate Agent will Look for
For example, maybe a home was an investment sale based on rental income. The home sale may have been between family members. This sale can occur directly or through an LLC or trust selling the home to a family member. There could also be another catalyst to the sale such as financial stress, divorce, job move, or any other number of reasons a home sells quickly or slowly.
Expert real estate agents go above and beyond for their clients. These agents will look at every single detail when determining your home’s listing price. You should always make sure that the agents you get pricing opinions from are the most qualified to do so. Typically, the most qualified agents will have sold homes similar to yours. They will be active in your neighborhood. They will have successful track records in closing home sales. And finally, the agents own personal track record will glow with positive results. This typically means selling many of their listed homes at or above asking, most of the time.
You can find exactly which real estate agents are top producers in your neighborhood by making your Zipi Wiki request today.
2. Avoid Obscure and Century Pricing in Your Home’s Listing Price
It’s been proven that there is psychology into pricing just about anything, including a house! Things priced just under a “century” numbers (aka, a round number) tend to be more attractive to someone in the market. For example, think about listing your home for $299,999 instead of $300,000. It will appear more approachable to potential buyers.
Also, avoid pricing a house at a random and obscure number, such as $234,567. It is distracting to buyers and tends to give a bad impression of the property and seller.
3. Consider Online Searches for Determining Your Home’s Listing Price
So many buyers look online when first searching for a home. They also have a price range that they are considering, or can afford. Therefore, a buyer who is looking at homes in the $230,000 to $250,000 range probably will not see your home if it’s listed at $255,000. However, if you choose a listing price such as $249,999, it will show up within that search and may just end up being the reason you sell your house quickly!
4. Don’t Hesitate To Cut Your Homes’ Listing Price After Going Live
Let’s face it. Sometimes you may have just priced your home too high. Luckily, it’s not unusual to see price cuts and 60% of sellers change their price at least once, according to Zillow
. The key is to not drag your feet and make an accurate adjustment after you have recognized that you’ve overpriced your home.
Also, avoid making minor price adjustments over time. Older listings aren’t as attractive to buyers and your goal is to sell your home quickly. When adjusting your home’s listing price, it’s always wiser to make one bigger price correction up front.
5. Seasonality and Inventory Affects Your Home’s Listing Price
In a majority of the United States, spring is considered the best time to sell. Weather is improving, families prefer to move in warmer months, and it’s easier to move while the kids are on summer break from school. Winter
, on the other hand, can be the slowest season, due to the holidays, along with the likelihood of bad weather. Consider this when choosing your home’s listing price!
You’ll also want to consider the inventory of the real estate in your area. The more homes listed in your neighborhood, the less you can dictate the price. Alternatively, if you are one of the only homes for sale in your area, you may be able to get your asking price. Maybe even more!
6. Completed Upgrades To Your Home? Don’t Count On Recouping It All
So you just spent thousands of dollars updating your kitchen, or you just put on a brand new roof. Great! Some of these things are going to be just what a buyer is looking for. You needed to make these changes for your living quality and they will only help your home sale. That being said, it doesn’t mean you can increase your asking price to make your money back when you sell.
According to Realtor.com
, much of it depends on the types of upgrades and renovations you’ve completed. For example, refinishing hardwood floors is a great investment, as it generally will bring you a 100% return. However, converting your basement into a living area may only recoup 69% of the costs that you put into it. Not everyone is going to have your taste when it comes to remodels. Make sure if you invest in your home before selling, you work on upgrades
that will help to increase the value of your home.
7. Wiggle Room for Your Home’s Listing Price
If you have a home that may be attractive to a first-time homebuyer, consider covering closing costs. Many first-time buyers have a hard enough time coming up with all of the cash for their down payment. You can help them stay within the guidelines of getting qualified for a loan. If you offer to cover those closing costs, it may just the trick that closes the deal! This may allow you to stick to your asking price and not lower it as well. You can help them, and they can help you.
At the end of the day, picking your home’s listing price is extremely important. If you go the wrong direction, it could take you much longer to find the right buyer. If your listing sits too long, it may make your home listing seem desperate. That is when you end up selling your house for a price way below the market value.
With all of these tips fresh in your mind, you now have the resources to choose your home’s listing price! Make sure to choose an excellent real estate agent
and you will be able to choose the perfect listing price for your home. Now, you are prepared to sell your home for top price as quickly as possible!