Pricing Your Home
How to price your home right
If you’re serious about pricing your home correctly, then contact your REALTOR® to ask them to determine the market value of your home. There are many different approaches to determining a home’s current, fair market value. The most common approach is known as a comparable market analysis (CMA), where a real estate professional will investigate the past six-to-twelve months of market data for a particular neighborhood containing the subject property and compile an in-depth evaluation of recently sold “comparable” homes. Through this process, it’s important for the agent to examine the home, its neighborhood, school district while having a firm grasp on local trends.
As the seller, it’s helpful to understand how your agent is determining your home’s worth. This value is usually presented as a suggested range of how your home should be priced. A well-composed CMA will have a price range reflective of the current market conditions for the seller’s consideration. Please understand that a CMA is not an appraisal.
Pricing your home is an essential step when thinking about placing it on the open market. If you overprice it, many would-be homebuyers may never see it as it’s priced over and above their limit. Typically, the first three-to-four weeks is critical marketing time. If you’re overpricing your home, the demand and appeal for your property will likely vanish when it’s eventually reduced to where it should have been listed for its initial market release. At that point, it may be “too little, too late.” Slightly underpricing your home could actually work to benefit you as it can provide an opportunity for multiple offers.
A thorough CMA will include the following components: Comparable sales (ideally within the same neighborhood as your home, selling within the past three months, of similar size and age), listing-to-sales price ratios, withdrawn/expired homes, pending sales, active listings and market conditions (seller’s, buyer’s or neutral market).
There are also some common myths that you should resist when getting ready to list your home:
Pricing your home under the assumption that you need room to negotiate – elevating the list price of a home for the sake of negotiating can often lead to missed opportunities and agents/buyers who will avoid the property all together
Creative marketing fetches higher priced offers – buyers are smart too and they won’t pay more for your home because they found it through unique marketing channels; remember in the end that the market, through supply and demand, dictates what your home is worth
Third-party companies are valuing my home for more or less than what my agent suggested – Home values, such as Zillow’s Zestimate, are usually not great indicators of value in today’s market; there’s too much fluctuation in pricing and they don’t have access to the data which matters the most, from multi-list
The offer I received soon after my home was listed means it was priced too low – though sometimes true, this is usually not the case as there are many buyers constantly looking for homes at a competitive price point; most of them probably have a fairly good idea of your home’s value, because they’ve been shopping for weeks or months; when you receive an offer right away, it usually means you have a buyer who’s been looking for a home like yours and they don’t want to miss the opportunity to snatch it
We need to find the right buyer to get the price we’re looking for – under most circumstances, homebuyers don’t disregard the advice of their REALTORS® nor are they that out of touch with the present market conditions; buyers don’t usually stray from the pack, they understand the market for what it is