You will know if you have got it right because the market will show up and put offers on your property.
When putting your home on the market, it's easy to get caught up in choosing the sales price for your home. After all, more money means more choices, perhaps it would mean you could afford a more expensive home or neighborhood, buy a new car, take a family trip to Europe or become debt free. Uninformed sellers often choose the agent who suggests the highest listing price, which can be the worst mistake a seller can make.
The truth is it doesn't really matter how much money you think your home is worth. Nor does it really matter what your agent or five others just like them think. The only person whose opinion matters is the buyers making offers (The Market). Pricing a home should always be a statistical exercise involving comparing similar recent sales, making adjustments for the differences among them, tracking market movements and monitoring local current inventory - all to come up with a range and opinion of value.
While no two appraisals are exactly the same, they are generally close to each other, it's an educated guess but it's ALWAYS the market that will dictate the price.
Pricing For The Optimum Result
How do you know when your ASKING PRICE is about right? Lets look at the below example of a property with a $550,000 MARKET PRICE
Pick A Time Or Pick A Price
Homes sell at a price a buyer is willing to pay and a seller is willing to accept. If a home is priced too low (priced under competing properties) the seller should receive multiple offers to drive up the price to market value. So there is little danger in pricing a home too low. The real danger lies in pricing it too high and selecting your agent solely on opinion of value.
As an example, if your house market value is $560,000 and you were to put it on the market for:
$530,000 - sale might take 24 hours
$550,000 - sale might take 24 days
$580,000 - sale might take 24 weeks
$650,000 - sale might take 2-5 years
Start where YOU
are comfortable
Set a starting price high enough to protect the property's value but still appealing enough to attract the best buyers.
Getting the price right in the first few weeks is critical as this will mean your house will be on the market for a shorter time but you will achieve on or above market value.
Advantages Of Proper Pricing
1. Faster sale
2. Less inconvenience
3. Increased salesperson response
4. Means more money to sellers
5. Better response from advertising & sign calls
6. Finance gets approved
7. Attracts higher offers
Why Do Sellers Overprice? Lots of reasons:
- They feel entitled to make a profit
- They feel their home is superior to other similar homes
- They want a return on improvements and repairs
- They need to buy in another suburb, which is far more expensive
- They want to buy a bigger, more expensive home
- They want to pay off loans, credit cards etc
- They want funds for retirement or some other financial goal
- They think buyers want to negotiate
- They think real estate agents can get it sold for more if they just work harder
- They don’t understand the ageless fundamental principle in that; in over 95% of cases, the best price is obtained when the property is first on the market.
Did you notice that not a single one of those reasons has anything to do with the current market value of the home?
Remember:
The opinion of the market may not be kind, but it is never wrong. You will know if you have got it right because the market will show up and put offers on your property.
