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There are 4 common strategies that most sellers use to price their homes. It is unwise to assume that a higher asking price will net you a higher selling price. In fact, often this equation works in reverse if you’re not paying attention to what the market is telling you.
We did a little research and came up with a few tips you should considered when you set your asking price.
Tip #1: A clearly Over price home. Every seller wants to realize the most amount of money they can for their home, and real estate agents know this. If more than one agent is competing for your listing, an easy way to win the battle is to over inflate the value of your home. This is done a lot, with many homes that are priced 10-20% over their true market value. This is not in your best interest, because in most cases the market won’t be fooled. As a result, your home could sit on the market for months, leaving you with a couple of important drawbacks:
One drawback is your home is likely to be labeled as a “troubled” house by other agents, leading to a lower than fair market price if and when an offer is finally made on your home.
The other drawback is now you have been greatly inconvenienced with having to constantly have your home in “showing” condition . . . for nothing. Because most of these homes often end up expiring off the market, forcing you to go through the listing process all over again.
Tip #2: Somewhat Overpriced home. About 3/4 of the homes on the market are 5-10% overpriced. These homes will also sit on the market longer than you want. There is usually one of two factors at play here:
Either you believe in your heart that your home is really worth this much despite what the market has indicated (as you can see, there’s a lot of emotions caught up in this issue), or you’ve left some room for negotiating. Either way, this strategy will cost you both in terms of time on the market and ultimate price received
Tip #3: Priced Correctly at Market Value. Some sellers understand that real estate is part of the capitalistic system of supply and demand and will carefully and realistically price their homes based on a thorough analysis of other homes on the market. These competitively priced homes usually sell within a reasonable time-frame and very close to the asking price.
Tip #4: Priced Below the Fair Market Value. Some sellers are motivated by a quick sale. These homes attract multiple offers and sell fast – usually in a few days – at, or above, the asking price. Be cautious that the agent suggesting this method is doing so with your best interest in mind. Understanding these four pricing strategies will help you make informed decisions when setting your asking price. Carefully consider the pros and cons of each strategy to maximize the final selling price of your home.
