How to Price Your Home
Correctly Pricing Your Home for Sale
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
If you’re looking for a realtor to help you sell or buy a property, call me today!
Pricing your home is an art, and is something many realtors have not even mastered yet!
This blog is important for home sellers because it’s essential that you price your home properly from the beginning to ensure you aren’t leaving any money on the table.
We’ve put together the ultimate guide on how to price your home to generate a sale.
We go through how to price your home, factors that affect property value, and tips on pricing in any market.
Keep reading for everything you need to know about how to price your home!
Curb your emotions and look at your home like a buyer would
It can be difficult to make rational decisions on pricing your home when there’s so much sentimental value from precious memories & time spent there.
Emotions can make it hard to have a realistic view of your home’s value. The un-renovated kitchen doesn’t seem like an issue in YOUR home, but when you go to look at places you might notice that you’ll start to complain about how places are so out-dated.
Plan to receive advice with an open mind, listen to your realtor’s feedback on how your home compares to others on the market, and price in line with the market and un-emotionally.
Pull the active listings
Active listings will show you what is currently on the market that you will be competing with. If a home that is identical to yours but more renovated is listed at $550,000, then because it’s your competition the best course of action would be to adjust your lack of renovations based on their list price.
Ask yourself why a buyer would prefer your home over any of these others and adjust your price accordingly.
It’s important to take a hard look at active listings because they will also show you what has not yet sold, and at what price. Bear in mind that sellers can ask whatever they want. That doesn’t mean they’ll get it.
Pull the sold listings
The sold listings are the success stories of the current real estate market! You’ll want to make sure that the ones that you pull are RECENT comparables – not ones from last year. (even 3 months ago can be out-dated depending on your market!
Compare your home to what has sold, and adjust for square footage, location, lot size, upgrades, and condition at a minimum.
To determine a proper listing strategy, you’ll also want to compare the original list prices to the final sales prices. If you’re in a seller’s market, you’ll likely notice it is common for a home to sell for 100% or more of the listing price. If you’re in a buyer’s market, you may see that they consistently sell for less or have had multiple price reductions. Take your current market in to consideration when pricing your home.
Pull the expired or withdrawn listings
The expired and withdrawn listings are proof of what didn’t sell. They will navigate you towards mistakes you can avoid when it comes to listing your home – most commonly, overpricing.
Aside from the price, don’t forget to look for other reasons why these home’s didn’t sell. Was it a discount brokerage listing the home that might not have spent sufficiency money marketing the home? Was the buyer’s agent commission cut? Was the marketing lacking?
Use these types of listings to prevent your home from being in the same boat, and make sure you hire an agent that will ensure your home is marketed properly.
Get a competitive market analysis from the RIGHT realtor
It’s safe to say that some agents are much better at understanding the market and buyer psychology than others. Oftentimes this comes with experience, but also education and exposure to economics, sales, and psychology.
Find an experienced and trustworthy agent to provide you with a competitive market analysis (CMA). This will include a detailed report with all of the active, sold, withdrawn properties (also referred to as “comparables” or “comps”), an estimated market value, and a pricing strategy. These are the basic components of the process. During this process an agent will likely provide you with a market exposure report, in which they will detail their marketing plan to get your home sold.
If you’re interested in a FREE market evaluation, contact us today!
Review the 5 factors that influence a home’s value
Simply, there are 5 factors that influence a home’s value. If you feel that you are “lacking” in one department, then you’ll need to adjust accordingly.
- Location – If your home is in an undesirable location (busy street, on a T, etc.) or far from the downtown core, because this is something you cannot change you will have to adjust your price to communicate the value of your home despite the location.
- Condition of the Property – This refers to general maintenance and upkeep. If the condition of your property is less than the active properties available, then you may want to consider adjusting your price accordingly.
- Style & Design – If your home is cosmetically or architecturally out-dated, then you have the option of renovating to the standards of competitive properties or adjusting your price accordingly.
- Marketing & Exposure – If your marketing and exposure aren’t at its best (aka you hired the wrong realtor), then your price will take a hit. Make sure to hire the right agent to ensure that your home is seen to its full potential.
- Market Positioning (aka the Price) – How you choose to position your home in the market will affect your chances of selling. By overpricing your home you will lose the freshness and appeal of a new listing after the first two or three weeks. Demand and interest fall after this time period, and dropping the price at a later date can be a matter of “too little too late.” First impressions are key, price it right from the start.
Determine a price that aligns with the market!
After you’ve collected all your data and found the right realtor, the next step is to analyze that data based on market conditions.
If you’re in a downturn, you’ll want to price smart from the start. If you’re always chasing the curve but never ahead of it, and the curve is consistently falling then you will risk losing more money by not adjusting to the changing market now.
You may also want to leave some wiggle room for negotiating in a buyer’s market, but you’ll want to be close in line with your competition to entice a buyer to tour your home. Pricing too high for wiggle room can leave you with few showings, and a minimal chance of even getting an offer.
If you’re in a balanced or rising market, then pricing at market value and hoping for multiple offers is a strategy to push the price higher than the last sale. If it goes multiple you may get over market and set a new benchmark, and if there’s only 1 offer you’ll likely be able to negotiate for listing price or within reason anyways. In a strong seller’s market with low inventory, you may even be able to add slightly to the last comparable sale.
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If you’d like a FREE market evaluation of your property along with a pricing strategy we are here to help. Our experience and knowledge will help to ensure you get the most out of your home’s sale. Call us today at 604-765-0376. Prefer text? 604-319-0200. Or email us at [email protected] for your free consultation.
