Pricing Pitfalls and Why to Avoid Them

Created with Sketch.

Spring selling season for real estate is officially upon us. This is the time of year that many people decide to list their homes. They consider a move across town, a larger, move-up house, or perhaps look to relocate. Historically, this time of year proves to be one of the busiest in terms of activity and new listings. One of the most crucial factors for the success of selling a home is pricing it correctly. Many factors contribute to correct pricing, but we want to highlight two key areas to consider when pricing a home.

The Real Estate Market Determines a Home’s Value. Oftentimes, clients have a price they want to receive for a home, or they have invested money into a remodel and want to yield a return. As much as a person may want to recuperate all of the money he or she has invested, the true indicator of a home’s price should be market value. This is determined by recent comparable home sales (oftentimes referred to as “comps”), and appraisal values. We actually perform a comparative market analysis on homes and properties to determine the best listing price. Typically, the size of the home and location are the biggest determiners in list price, not amenities of a home. Sometimes this works to the client’s advantage, and the home price may actually be set higher than the amount of money they have invested, or at a significantly higher price than they paid for a home. In this market, we are currently seeing strong home values; in many ways it is a seller’s market.

Pricing Correctly Attracts the Most Qualified Buyers. Consider this: if you list a home too high, you will automatically “price out” interested and qualified buyers. A common mistake is to try listing the home at a higher price than recommended, with the idea to lower the list price if it doesn’t sell in a reasonable amount of time. Interestingly, the most activity on a home listing occurs near the time the listing goes on the market. If you list a home too high, you will not receive the activity you want to see on the home, and you take the chance that those who are actually interested in purchasing, and able to do so, will not consider your home. By the time you consider lowering your price, you may have already lost the opportunity to appeal to the buyers who qualify in the price range of the new list price.  However, if you price a home in the correct range, you will attract buyers who can afford both slightly more and less than the list price, as it will be set in the range for the right buyers. You will see quicker and more efficient results.

These two pricing factors have the ability to differentiate a successful real estate sale from an unsuccessful sale. A knowledgeable real estate professional will help you navigate the complicated waters of pricing a home. Please call us if you would like a complimentary comparative market analysis. We always strive to partner with you for a successful pricing strategy.