Pricing your home can be challenging. Most sellers count on their real estate agent to tell them how much their home is worth. Yet, it is not unusual for a seller to not take their agent’s advice.
Prove It
Your agent should show you comparable homes (“comps”) to support their recommended price. This is a suggested price. How you price your home is up to you. Make sure that the homes are indeed comparable to yours. They should be about the same size and configuration with a similar lot size. No two homes are exactly alike. Your agent should have done enough analysis to explain why your house is worth more than Comp A or less than Comp B.
Look Deeper
Your agent begins with an analysis of homes in your neighborhood. If properties have been selling quickly, looking back 90 days is sufficient. In slower markets, your realtor may have to go back as long as a year. Sometimes there are not enough comps in your area. Your agent will then consider similar homes in a nearby comparable neighborhood. Your agent should provide you with 3-6 detailed comps. They need to explain why they based their recommended price on these particular properties.
Put Pride Aside
Your home is your pride and joy. You’ve decorated it to your taste. You love the flooring, cabinetry, and paint colors you selected. There are times when your design choices are not widely appreciated. In situations where you have made bold design choices, you can either neutralize it or lower the asking price. Another option is to hire a professional home stager. They have ways of drawing attention to the features that have broader appeal.
Fix It
It’s better to fix a problem than to offer a credit. Even minor issues can make a buyer believe that the home has not been well-maintained. You may have fixed the leak that caused that stain in the ceiling, but you don’t want to explain that to a prospective buyer. Patch and paint it. If your bathroom faucets look old and cruddy, replace them. Your realtor can suggest repairs and upgrades that make sense.
The Reason Matters
Why you are selling affects the offer price because it impacts your timeline. If you’re going through a divorce, you may need to sell fast. In that case, price your home under fair market value to attract a buyer. In a dire situation, such as impending foreclosure, consider a cash investor. There are companies that will buy your home in any condition for cash. They usually do not charge commissions or closing costs. (If you’re in Dallas / Fort Worth, you may be able to sell your home to PDuran Properties. Most of their deals are completed in a few days.)
Some realtors recommend pricing well under market in the hopes of starting a bidding war. (There’s no law that says you have to sell, if the strategy doesn’t work.) If you’d like to move, but it’s not imperative, you can take it off the market if you don’t get your desired price.
Strategize
Your realtor should present a pricing strategy – not a hard price. Let’s say your agent’s analysis shows a fair market price of $350K. You believe you can get $400K. Your agent can market your home off the Multiple Listing Service (MLS). (Known as a “pocket listing.”) This avoids racking up Days on Market (DOM) while you’re testing a price. Or, list at $400K, but agree to lower the price substantially if no offers are received in, say, two weeks.
You End Up Where You Should Have Started
The longer your home is on the market, the harder it is to sell. After a few months, buyers start to assume that there is something wrong with the home or the sellers are unreasonable. Comp analysis has proven to me that sellers who overprice their home end up where they should have started. They reduce the price slowly over a long period of time believing that a big price drop means leaving money on the table. They end up selling for the same or less in the long run. Further, the longer a property is on the market, the greater chance the market will change – not always for the better.
The Best Price
The best starting price for your home is a combination of comp analysis, home condition, and how quickly you need to sell. If you’re not sure, consider a brief trial period at a higher price. Ultimately, your home will sell for the highest price the market will bear.
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