How To Price Your Home The Right Way.

Feb 25, 2008 - 18:51 PM PST



Pricing your home correctly is the most important thing to do when selling your home. The first 2 weeks of your home being on the market are the most important because they bring in the best buyers and you only have one chance to make a first impression. If your home stays on the market too long they will wonder what’s wrong with your home and may pass looking at it all together.
When pricing your home, take your emotions out of it. So many times homeowners get caught up in thinking since they added 50K to 100K or more in upgrades that they can just pass the costs on to the buyers. Or “ I hear my neighbor got this much so I should get that”. Or they try to price their home at or higher than what other unsold homes are priced at. Those games don’t fly in the real world. Buyers are not looking at just your home they are looking at 10 others that day. It’s not uncommon for them to see several hundred homes before they find the right one. They know when a home is overpriced and will more likely pass then try to negotiate. So the excuse I’ll price it high and leave room for negotiating doesn’t work either. Here is what you need to do: Mentally pretend you are a buyer. Look at other homes in your neighborhood that are on the market and find out how long they have been for sale. These are your competition and remember if it’s still on the market it could be a sign that those homes are overpriced. Which leads too my second tip: Have several Realtors do a Comparative Market Analysis for you otherwise known as CMA. Have at least 3 Realtors do one for you. Don’t fall for the line I can get you a higher price because I’m #1, you want cold hard numbers and facts. Some Realtors tell you what you want to hear just to get the listing and then turn around later and tell you to lower your price. You want to not only hear what common price opinions are but you want it backed up with proof. Make sure the comparables includes homes in Escrow (often referred to as Pending and Back Up offers) and homes that have Sold (otherwise known as Closed Escrows), not just homes active on the market. Notice the days on market and price. What’s the trend? Are the Days on market increasing or decreasing? How about home values are those increasing or decreasing? In a market that shows the values dropping, price your home below the closed sales price ahead of the curve. In a dropping market today’s bargain is tomorrow’s overpriced house. Keep in mind what time frame you need to move and discuss that with your Realtor. In an increasing market you may be able to price your home at what is actively on the market. However pay close attention to what price the homes are pending at and how many days it took for the homes to go into escrow.
One last thing most people overlook when pricing their home: Even if you find a buyer who is willing to buy your home at a higher price then the going rate for the area, its likely the appraiser will tell the bank the home is not worth the price and someone will either have to lower the price, bring in cash to make up the difference, or both. Remember, if you were a buyer what would you do?