When it comes to successfully selling real estate, the pricing strategy plays a key role. Obviously, everyone wants to get top dollar for their properties, but asking for an astronomical amount isn’t the way to do it.
Coming up with the right listing price isn’t a simple process, so it’s no wonder that sellers are prone to making mistakes. Steer clear of the following 5 pricing blunders to help ensure a speedy sale at the price point your home rightfully deserves.
1. Pricing High Because You’ve Got Plenty of Time
Just because you’re in no rush to sell and move out doesn’t mean you should use the price of your home to test the waters of the current market. Oftentimes sellers who have the luxury of time list their homes at sky-high prices to see what they can get. But pricing way too high from the get-go is a big mistake.
Your property will get the most attention during the first couple of weeks that it’s on the market. If you price your home higher than its current market value, you’ll miss out on attracting qualified buyers.
Setting a high listing price simply because there’s lots of time to play with will almost undoubtedly make the property sit and linger on the market for longer than necessary. And we all know what happens to listings that become stale: they’re labeled. Buyers will begin to wonder what’s wrong with the property if it’s been sitting on the market for longer than the average home in the area.
Nothing’s actually wrong with the property – except for its price.
2. Pricing Without Checking Out the Comps
No professional real estate agent will encourage their clients to list their homes at any random price without suggesting that a comparative market analysis be done. These CMA reports list similar homes in the area that have recently sold, and how much they were sold for.
From these listings, agents can gather an accurate picture of what buyers would be willing to pay for your property based on the sale prices of similar properties in your area. Agents will want to have an in-depth look at these comps to see what the current market is like in your community for your type of property.
Coming up with a listing price is no simple feat. Agents spend hours researching and analyzing data that’s contained in these historical reports to come up with the best price possible that will increase the odds of your home selling in an acceptable amount of time and for the price it’s currently worth.
3. Pricing Based on Financial Needs
Many sellers wants to make the most money on the sale of their homes in order to provide the capital needed to fund another purchase. While there’s nothing wrong with wanting to make a pretty penny on the sale of a home, asking for more than what it’s really worth just to pad your pockets has no merit.
Whether you want to buy a much larger home in a well-to-do neighborhood, or simply want to take an extravagant holiday or even pay down debt, pricing your home to satisfy your pressing financial needs is a mistake you want to avoid.
4. Pricing Too High to Make Room For Negotiating
Creating a gap between the listing price and what the home is actually worth just to leave room for negotiations is a big no-no. And while many sellers actually believe that this is a common strategy in the real estate game, it’s a mistake that could shun plenty of buyers.
These days, buyers are smart and savvy. They’ve got the internet at their fingertips, and tend to start their house hunt armed with information. And with the data that they receive from their real estate agents through an analysis of comps in the area, they’ll be better able to spot which homes are priced fairly, and which ones are simply overpriced.
Rather than set the stage for major price fluctuations at the negotiating table, you’re better off pricing your home accurately. Odd are the buyers’ real estate agent will be providing their clients with the right information to help them make an informed decision on what to offer on the home.
While many times buyers will try their hand at low-balling, the odds are higher that you’ll get a better price for your home in a much shorter amount of time if you just price your home accurately from the start.
5. Pricing According to How Much is Invested
If you dumped thousands of dollars building an addition on your home or putting in a pool, you’ll likely want to recoup all that money invested upon the sale of your home. While some renovations will boost the value on your home and bring in a higher return, others do little more that satisfy the owner’s needs rather than add value to the home.
It’s natural to want to get that capital back, but overpricing your home to recoup those funds likely won’t put as much money back in your pocket as you’d like.
The Bottom Line
Your real estate agent is a professional in all aspects of the realm of real estate, including the process involved in coming up with the right listing price. Do some research and homework, be realistic, and list your home competitively to begin with. Doing so will up the odds of getting some solid bites from prospective buyers sooner rather than later.