Pricing your property is a balancing act
On the one hand you want to set a listing price that maximizes interest among qualified, motivated buyers who will be willing to pay top dollar for your property. Indeed, such buyers will ultimately determine your property’s top dollar.
On the other hand, you do not want to set a listing price that attracts a lot of buyer prospects, but sets the stage for negotiations that result in your getting less than what your property is really worth.
Your Home’s Actual Market Value
In a perfect world, your home’s value would be everything you think and need it to be. However, simply put, your home’s value is not determined by you, but by what the market is willing to pay for it at a given time. These days, the “market” increasingly refers to home buyers who have researched property values over the internet for months, have already viewed a number of homes, and are not under any undue pressure to buy.
You can determine a value range for your home by looking at recent sale prices and current asking prices of homes similar to yours in your area. That is why you should receive a comparative market analysis from a realtor active in your area.
The Bottom Line: Realistic is Strategic!
One average serious buyers look at about fifteen homes before they make an offer. Doing so gives them a basis for determining how competitively a property is priced, both in terms of market generally and what they are looking for specifically. If you over price your property you’ll usually not attract serious buyers. How you price your home will directly impact upon how many buyers, showings and offers you attract, and ultimately to how easily it sells.
The Consequences of Overpricing
The strategy of overpricing your property – knowing that you can reduce the price later – might make sense at first glance. However, it seldom works. In fact, sellers who overprice their properties – even just 10% above market value – often end up getting less than they would if they had priced it properly from the start.
- A high price on your property makes other comparable properties more attractive, so you actually help your competition.
- Fewer buyers will respond to ads, fewer agents will show your property, and you’ll get fewer offers
- Reducing the price after buyers have begun to perceive your home as a “stale” listing will not generate nearly as much interest as if you’d priced the property right from the start.
That is why rightly pricing your property to coincide with its window of maximum market exposure and buyer interest is so important (generally between weeks 3-5).