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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.
Mary, a Houston Realtor client originally listed a home for about 675,000. Ultimately, the seller had to yield to the reality of the market and drop the list price by $10,000.
As we say in real estate location, location, location drives home prices, but in this instance, that wasn't the issue. The home's location wasn't challenging, but the buyers were either turned off by the price with the narrow streets and almost non-existent driveway, front yard and backyard. Since this wasn't a townhome or condo, pricing was very important in getting this listing sold.
Yes, location absolutely matters, but Sellers have to consider who are their most likely buyers?
The most obvious pitfall: A house that remains on the market for months can prevent you from moving into your dream home. Have you already purchased that next home? Well, you might saddle yourself with two mortgages. This isn't the best option for most sellers.
You lose a lot of time and money if you don't price it right. As if is often said Remember Time Is Money. Who wants to waste money, if there is another viable alternative? Well, a correctly priced home may be the solution for that.
Price testing is not the correct approach either. Many sellers want to put their feet in the water and test to see if there is any interest. We don't want to use a trial and error approach to pricing your home. While you are price testing other Sellers who have correctly priced their homes may be getting the buyer that was meant for your home. By the way, continually lowering the price could turn off potential buyers who might start wondering just if there is something wrong with your home. We definitely don't want to give the false impression that there is something to be concerned with as it relates to the condition of your home.
Buyers are much more savvy today. They are smart and educated in many cases with what is happening with home sales in their local areas. So, if you don't correctly price it, you may lose those buyers.
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.
Assuming renovations should result in a dollar-for-dollar increase in the selling price or more.
Many homeowners think their home is home is majestic and worth a gazillion dollars. 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.
Another thing to keep in mind is that if your house is the largest and nicest on the block it may not yield the money that you are looking for when you are ready to sale it, but of course, make your home whatever you image it to be for your comfort and enjoyment. However, smart renovations make your home more comfortable and functional but should typically reflect the neighborhood. We 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 your local real estate agent, Linda Harris, who will use something called comps (also known as comparable sales) to determine the appropriate listing price. We're not just looking at your neighbors; we're seeking out near-identical homes with similar floor plans, square footage, and amenities that sold in the last few months.
Once we've assembled a list of similar homes (and the real prices buyers paid), we can make an accurate estimate of what you can expect to receive for your home. If a three-bedroom bungalow with granite countertops and hardwood flooring down the block sold for $359,000, expecting more from your own three-bedroom bungalow with granite countertops and hardwood flooring is a pipe dream.
After crunching the data, we'll work with you to determine a fair price that'll entice buyers. The number might be less than you hoped for and expected, but listing your home correctly, not idealistically, is a sure way to avoid the aches and pains of a long, drawn-out listing may exceed the typical Days on Market for your area.
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.
In our experience, it is easy to determine if a house is overpriced by the number of showings in the first 3 - 7 days and the number of quality offers received. If we have no showings, it's way too high. Lots of showings and no offer means we've marketed well, but it's overpriced once people get inside.
If we could just pick up your house and drop it into another location that would be awesome and then get the price you want, but unfortunately, that isn't possible.
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. If you want to know how much your home is worth, please request a Comparative Market Analysis (CMA) or give me a call at 281-795-2383.
