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 The Importance of Pricing Your Home Correctly 

Selling your home can be a time-consuming and tricky venture. The one thing that everyone has in common is wanting the get the most for their money, or the best deal. When it comes time for you to sell your house, you want to make sure that your home is not priced too low so that you don’t regret the sale, and that it’s not priced too high so that you can’t make the sale. Getting the right price for your home is an incredibly important first step in the sale process. So how can we know for sure? Keep this in the back of your mind through this whole process – “your home is only worth what someone is willing to pay for it.” That being said, let’s move on.

If you decide to use a Realtor, you may get a few different quotes of what they think your house is worth. The temptation is to take the highest quote, but this can be misleading. If you get three Realtors to evaluate your house, and two of them are about the same but lower than you thought, and they have the recent sales data of similar homes to back up their estimation, and one of them is higher and fits right about or above what you think, that Realtor may be trying to “buy a listing.” This practice, while unethical, does happen today. The realtor making that higher quote has no intention of listing your home at that price, but rather gets your listing, and then talks you down. That listing agent then gives your information to lots of local agents who work with homebuyers, who are all trying to get the sale of the home for their client. If the price is too high, there is less activity and fewer agents will be looking at your home. So, if the listing agent knows that your desired price is inflated and the market doesn’t support it, they won’t list at that price. This affects your sales price in the long run. Houses that start out with a high sales price and then drop can be considered “old news.”

The initial activity of a home priced right will gain momentum and keep going. If you over-price, the home will sit and could take longer to sell. Even if you do find an uninformed buyer, they have to get the house appraised by the mortgage lender, which could then show that the current market won’t support your price, and your deal will fall apart. The longer your home sits on the market, the harder it is to get good deals. Potential buyers will think you might be getting desperate, so they will make lower offers. You’ll find yourself having sold your house for less money than if you would have gone with the first two realtors. Comparable sales, or comps, are a crucial element in determining an accurate value of your house.

Some guidelines to help you get accurate comps are to compare homes with the same number of bedrooms and bathrooms. Stay within a 0 to ½ mile radius from your home. If there aren’t any homes that have sold recently in that area, go to ¾ mile, then one mile etc. Use a home that has similar square footage, and give yourself a 20% plus or minus difference. For example, a 1200 square foot house has acceptable comps between 960-1440 square feet. Make sure your comps have similar ages to your house and try to use comps that are within the last six months.