Pricing Your Home to Sell (and why it’s important!)
If you are a homeowner who is thinking about selling, it’s crucial to understand why pricing your home to sell is so important. According to a 2015 survey from the National Association of REALTORS®, houses that were on the market two weeks or less received a median of 100 percent of their asking price. Meanwhile, houses that were on the market for three to four weeks received on average only 97 percent of their asking price. For a $250,000 house that’s a difference of $7,500!
Below I’ll explain how to correctly price your home so that it sells for the most money. But first, lets look at some background information about some perceptions buyers have when they are searching for a home to buy.
What is so special about the first 30 days on market?
The short answer is the first 30 days is when your home will get the most buyer traffic and internet views, which means demand for your home will be at it’s highest during this time. Since it’s “new” to the market, all the buyers that have been looking in your home’s area and price range, will flock to your home like the salmon of Capistrano! If your home sells in these first 30 days, you can be pretty confident that you got the most money for your home.
Take a look at the graph below which shows buyer activity (interest) level over time. Can you see that the longer your home sits on the market, the less buyer activity it will receive?
What if my house doesn’t sell in the first 30 days?
Well, I’m just going to be honest – after the first 30 days, you start to enter the danger zone. To understand why, you have to get inside the head of the buyer. Questions start popping into the buyer’s head that cause negative reactions to your home like “why hasn’t this home sold?” or “what’s wrong with this home that it’s still on the market?” Potential buyers may be turned off by this stigma, causing your home to sit for longer than you want and ultimately could lead to getting a lower price for your home. Both are scenarios you want to avoid like the plague.
So how do you avoid the danger zone and ensure your home sells in the first 30 days?
Many homeowners make the emotional mistake of pricing their home too high in the beginning, thinking that will get them more money for their home. The reality, however, is that pricing too high can lead to the scenario outlined above – less interest, fewer buyers, longer time on market and less money.
The key to avoiding the danger zone, then, is pricing your home to sell (correctly and objectively) from the beginning so that you don’t miss out on the excitement and momentum generated when your listing first hits the market. Remember, the first few weeks is when interest in your home will be at it’s highest.
How do you price your home correctly?
Correctly pricing your home to sell can be somewhat of an art and a science, so it’s best to utilize a licensed real estate agent who has access to actual sold data from the MLS. Using this valuable information, a licensed realtor can put together a customized market analysis based on recently sold homes in your neighborhood, called “comps” or comparables.
Let’s take a brief look at the objective information about “comps” a licensed realtor uses to provide a value estimate:
- Homes sold – how many homes sold in your area
- Sales price – what price the homes sold for
- Currently active listings – what homes are currently for sale in your area
- Active listings’ price – what is the current list price of the active listings
- Similar sq ft – are the homes comparable in size?
- Features and updates – are the homes comparable in features and updates?
- Age of homes – are the homes comparable in age?
- Days on market – how many days did it take for the comparable homes to sell?
Using this objective market data, your realtor can provide a reasonably accurate price range in which your home will likely sell.
*Note: There can be other factors that play into an estimate of value such as seasonality and current market conditions (is it a buyers market or seller’s market?) Your real estate agent will apply his or her knowledge in these areas as appropriate.
When you combine the above market data with your realtor’s in depth understanding of the unique characteristics of your property and expertise in the local market to establish an optimal pricing position, you set yourself up for success in selling your home (and probably getting more money in your pocket!).
Related: Pricing Houses to Sell
Got Questions about selling your home?
My commitment is to be there for you, every step of the sale. If you have questions about the home selling process, call or email me today so we can sell your house at the best price and with the least amount of hassle 817-905-4317 or firstname.lastname@example.org.