How to Price Your Home?
March 6th
If you have ever wondered how pricing strategies can help sell your home, here are a few options on which approach might be best suited for your home sale.
Pricing Below Market Value
A lower pricing strategy, usually 10% below market value, is designed to create lots of interest, which could create a bidding war.
When a seller receives multiple offers, it gives them room to negotiate conditions, terms, as well as price. Because this pricing strategy attracts a large number of buyers, it is typically coupled with a deadline for offers that could get a home sold within a short amount of time.
This type of strategy is typically used to get buyers excited about the home. The more excited buyers are, the more likely they will want to buy.
Keep in mind that you are not obligated to accept an offer that you do not find acceptable. If a buyer is not willing to negotiate, and you do not like their terms, and /or price, you can always reject their offer.
Pricing at Market Value
Pricing a home at market value may not get as many buyers through the door as a below market strategy, however, when a home is priced right, it will generate an offer or possibly multiple offers. When sellers have multiple offers in hand they can negotiate favorable terms that align with their desired outcome in terms of price, conditions, and sale date.
This type of strategy does generate excitement, but it may not create the kind of frenzy, a below market pricing strategy tends to generate. Because there is less excitement it may not create a bidding war, but that does not mean this is not a good pricing strategy.
A seller determines how much to sell their home for, they may not feel comfortable pricing their home 10% below market value. There are multiple risks involved when pricing your home below market value and there is no guarantee a seller will get multiple offers.
Because of the risks, a seller may want to price the home to sell at market value instead of pricing their home below market value.
Pricing Above Market Value
There are times when pricing your home above market value is the best pricing strategy for selling your home. Some instances when you may want to consider using this strategy are when your home is in a highly desirable location, it is bigger than homes in the area, or has the best view in your neighborhood, to name a few.
If your home has features that are significant, and unique that add value, you may decide to price it higher.
A common assumption is that the seller determines what a property is worth, but that is not correct. Buyers are the ones who determine the value of a house and how much a buyer is willing to pay for a home ultimately determines its worth.
That is why sellers get less or more than what they list their properties for and it is simply because a buyer did not think the property was worth the sales price or a buyer thought the property was worth more than the sales price.
Keeping in mind that the buyer determines the worth you should always consult a good real estate agent to put together an analysis of sold properties in your area, this analysis is called a Comparable Market Analysis.
This report provides you with the most recent home sales in your area. Typically the report includes homes similar to your own that sold within a certain radius of yours. This will give you a better perspective on what price your home could be sold for.
A good agent will also provide you with a picture of the sales process using the three different pricing strategies.
Weigh the pros and cons of each strategy and consider which strategy is best suited for you and your family.