5 Tips for Pricing Your Home Correctly
The local housing market provides clues to your home’s ideal asking price
Curb appeal and gorgeous real estate photos might get people to fall in love with your home when you list it for sale, but the price will get them to take action. Set it too high, and buyers will move on to the next home; set it too low, and you risk undervaluing your biggest investment. If you’re wondering how to price your home to get the best offers from buyers, here are some tips to consider.
1. Work With an Experienced Real Estate Agent
Unless you are a seasoned real estate investor who has bought and sold numerous properties, you are likely not in the practice of analyzing the local market. But a real estate agent will be familiar with the home values in your area, and they will help you arrive at a suitable asking price for your home that’s competitive for your home type and will hopefully make you a tidy profit, too.
You might feel tempted to save on the agent’s commission and list your home as for sale by owner (FSBO), but sellers tend to get higher offers when they work with an experienced agent. According to data from the National Association of Realtors, the median FSBO home sold for $260,000, while the median sale price for a home with an agent was $318,000.
2. Analyze the Comparable Properties in Your Area
Comparable properties or “comps” are other homes in your area similar to yours in terms of key features like the number of bedrooms, the amount of square footage, and the size of the lot. Your real estate agent will likely start determining an appropriate price point for your home by researching the area’s comps.
Keep in mind that just because a comparable home sold for a certain price doesn’t mean that it will be your home’s price. Even a home that is similar in size and features could still have unique qualities that would raise or lower the price. For example, a home in the middle of the street might command a higher price than one at the corner of a busy intersection. The same goes for co-ops or condos in the same building. A home on a higher level might fetch a higher asking price because of better views, even if the layout is virtually the same.
3. Don’t Overestimate Home Improvements
While renovating parts of your home can certainly increase your home’s value, you will not likely recoup all of the money you spent. Pricier upgrades won’t necessarily get you more money at resale, either, but any improvements made to your home have the potential to capture more interest among buyers.
Keep in mind that unless you expand the current footprint of the home—such as with an accessory dwelling unit or the addition of an extra bedroom or bathroom — you will remain in the same range as comps that have the same amount of rooms or square footage.
4. Be Ready to Adjust the Price, If Necessary
You can’t really time the market; the best thing you can do is set your home for a fair price that reflects the current supply and demand. If it’s a seller’s market, which means demand for housing is high while supply is low, you’ll likely get a higher price. In a buyer’s market, sellers might have to negotiate their asking price with buyers who have plenty of other homes to choose from.
While bidding wars are a regular occurrence in a hot seller’s market, you can’t force one by setting the price low in the hopes that a stream of ever-increasing offers will come in. This tactic will only devalue your home in the eyes of buyers who are hungry for a deal. On the flip side, if you price your home too high, you might only get the sound of crickets when no one shows up at your open house.
5. Leave Emotions out of the Equation
Buying a home can be an emotional rollercoaster, but selling one can be, too. It might be the bittersweet end of an era of living in a home that you adored for years, but try to keep emotions out of your pricing strategy. You might not be able to put a price tag on those happy memories, but a buyer will, so don’t let sentimental feelings get in the way of setting a fair and competitive price for your home.