How to Price Your Home Correctly
If you want to sell your home in the coming months, you'll be wondering about pricing your home correctly. Setting your home price fairly has a major impact on how fast your home sells. In some cases, it will make or break a sale. There's no overestimating the importance of this step when setting your house up for sale, especially now that the real estate market is beginning to show signs of slowing down after the rollercoaster of the pandemic years.
It's no secret that home sellers have enjoyed seller's market conditions for a good couple of years now. A severe imbalance in the supply and demand of housing led to surging home prices. Home sellers in in-demand areas didn't have to think too much about pricing their homes correctly, with many homebuyers so desperate to secure a property that they would agree to home prices well above what was normal or average for that particular area.
However, at this point, all the signs are pointing to a housing market that's slowing down, with the supply-demand ratio slowly rebalancing. This means that pricing your home correctly is once again paramount if you want to sell your home this year.
Why is pricing your home correctly so important?
Pricing your home correctly can make the difference between a house that sells and one that doesn't. Sounds simple, but it's true. A home that's been priced too high is typically off-putting to home buyers who now have a wealth of average home price data a few Google-search clicks away. Researching home prices is one of the first steps a homebuyer will take when looking for a home, and avoiding overpriced properties will be one of the key pieces of advice they'll be given.
Let's be honest here: although negotiating home prices can be a necessary part of the home buying process, it does prolong the home buying journey. Most buyers prefer a home already fairly priced so they don't have to enter a protracted negotiating process.
There's another reason overpricing your home can lead to a slower sale — or worse, a sale falling through altogether. A home incorrectly priced and then reduced in price in the online home listing will automatically ring alarm bells for buyers. They will assume there's something wrong with the property.
Finally, if a home has been priced too high and the mortgage lender returns to the buyer with a significantly lower home appraisal, the buyer likely will be denied a mortgage. The result is that the home sale falls through.
How not to leave money on the table when pricing your home
Having said all this, how do you price your home correctly without leaving money on the table? No one wants to come worse off during home sale negotiations, so what can you do to sell your home at a price that's fair but not too low? The answer may surprise you.
To sell your home at the best possible price, you typically need to price it competitively. If you're not sure, aim to price your home just a little under what a home of your size and type should sell for in your area. The homes that sell at the best prices are those that generate bidding wars from multiple buyers. Buyers generally know a good deal when they see one and react. You're much more likely to get multiple offers in excess of your asking price if the asking price is just a little under what buyers were preparing themselves for.
How low is too low? An experienced real estate professional is best positioned to answer that for you. You should always work with a real estate agent who has experience selling homes like yours in your area. Their knowledge of correctly pricing your home will come from prior sales, which is always better than doing your own calculations and potentially getting it wrong.
What strategies do real estate experts use to price your home?
Think of it this way: a real estate expert is working for you, the seller. However, to sell your home at the best possible price, they need to make your home as attractive as possible for the right type of buyer. Any real estate professional worth their salt will know that a home that sells fast and without leaving money on the table is a home that's marketed to the right audience.
For example, there's no point marketing a one-bed urban apartment to families, just as there's no point marketing a luxury home with a pool to families on tight budgets. A real estate agent is a little like a matchmaker: it's all about assessing home sellers and home buyers for compatibility.
A real estate expert will also have a keen eye for the aspects of your home that are attractive to buyers. Whether it's curb appeal and a beautiful backyard or space for a home office you hadn't considered, they'll assess your home in a fresh way that can make a substantial difference to pricing.