Choosing a listing price is one of the first steps in selling your home. The ‘listing’ price is the amount of money that your house is advertised for to potential buyers. Selecting the right listing price for your home can be tricky. Selecting a price that’s too high will turn off potential buyers, but price too low, and you’re leaving money on the table.
It’s been said before that setting a good asking price is part science, part art. It’s a mathematical mind game, and there are many aspects that you should take into consideration. Some up-front research and careful deliberation will help you expedite the selling process while still getting your money’s worth.
Comparative Market Analysis
Before you list your home, your real estate agent will provide you with a comparative market analysis, which is an examination of the selling prices of similar homes in the same area. Figuring out the market value of your home is the first step in creating your asking price.
Find out what similar houses have sold for in your neighborhood within the past three months. Homes should be similar in size, condition, neighborhood and amenities.
Real estate agents will also look at data that shows how long similar homes sat on the market at different price points, and the average difference between list prices and actual sale prices on similar homes that sold recently.
Buyers are more informed than ever before, often spending a considerable amount of time online and in person looking at similar properties, and it will be apparent to them if your home is overpriced. Remember—your home is only worth what someone will pay for it. If the market doesn’t meet your expectations, consider waiting until your market is more favorable.
Current Market Trends
The real estate market fluctuates constantly on a national and local level. Setting an attractive price based on the market might be the better option in the long run. This is because a lower price will attract more potential buyers. If the seller receives multiple offers, it could start a bidding war. A house with multiple offers only makes it more attractive to homebuyers.
On the other hand, if a list price is too high, it’s likely to sit on the market. A home languishing on the market looks particularly unattractive to buyers because they’ll wonder if there’s something wrong with it.
In a seller’s market, you can ask for more than the market value of your home and might receive a bid at that price. This is because there is more demands than the available supply.
A buyer’s market is the opposite. In a buyer’s market, there are more houses on the market than demand for the houses. In a buyer’s market, a seller might consider listing for less than market value or ensuring that the house is in tip top shape to receive the highest bids possible.
You should also keep in mind current mortgage interest rates, the job market, and the local and national economy.
Additionally, if you need to sell your home immediately, your price might reflect that need. Lowering your listing price will almost certainly attract more buyers, who will be more willing strike a deal on your bargain.