If you are getting ready to put your home for sale then you have surely given some thought to your asking price. Since we all want to maximize our price and shorten our time on market, we need to understand how our pricing strategy affects our outcomes.
Through years of experience buying and selling homes, as well as keeping on close eye on the Tampa Bay market, we have learned much about how different pricing strategies play out. Below are some of the lessons we have learned.
#1 Overpricing Backfires
While we all have fantasies of selling our home for high dollar figures, we need to control our emotions when it comes to out asking price. When a home is listed for more than it is worth, buyers have a tendency to ignore the listing and write the home off as not being worth their time. This means longer days on market, more mortgage payments, and more stress.
Don’t forget about the appraisal! If a home does not appraise for the price at which it is under contract, a bank will not lend on it. So even if you get your price, the buyer will not be able to get a mortgage for anything above the appraisal price.
#2 Price Per Square Foot Is NOT Everything
So a Realtor sent you a CMA (Current Market Analysis) and told you how much your home is worth based on price per square foot? Keep in mind that price per square feet is a baseline measurement. It simply gives a starting point for a deeper analysis.
Savvy sellers, agents, and appraisers understand that it is important to take into account details. Things such as condition, age, upgrades, special features, number of stories, and so on can drastically affect the value of a home.
#3 Consider Your Competition
So you have run your comps (Comparable Sold Properties) and determine a price? Before you run with that price, you will need to consider what is for sale nearby.
Many times we have gone to list a home and realized that we had no direct competition! All the nearby comps were much smaller, larger, or in completely different condition. As a result we have been able to list some homes (and get our price!) for $10,000 more than we originally anticipated.
At the same time, we have listed homes in neighborhoods where it seemed half the street was for sale at the same time. In order to sell those homes, we had to list for less than the comps said the home was worth. Otherwise we would have had the homes sit on the market for months while buyers went with similar homes at cheaper prices.
So What Should You Do?
Your listing strategy will vary from situation to situation. For example, homes that are unfinanceable (in very bad shape) often benefit from going for sale by owner and pricing low. Homes that are large and renovated may benefit from listing with a Realtor at top dollar.
Before you go to some website with an automated home valuator, give us a call. We will not only give you an honest estimate of your home’s value, but we will also make you a fair offer.