Coming up with a sale price for your home can seem overwhelming. However, with good guidance and the help of online home value tools, it’s easy to set a price that will both entice potential buyers and give you good returns. Consider the following to be sure your pricing is right.
Follow These 8 Tips to Accurately Price Your Home:
- Write down what you think your home is worth:
The first thing you should do is write down what you think your home is worth. It’s useful to have a starting point so you can see how your price compares to those identified with various tools and research throughout your pricing process.
Keep in mind that homeowners tend to overvalue their own home by 8% or more. That means if you take what you think your house will ultimately sell for (sale price, not list price) and subtract 8%, you will most likely get a more accurate version of what your final sale price will be.
Don’t rely solely on Zillow’s Zestimate:
The Zestimate is a great tool to use to create a useful starting point for your pricing process, but it’s not accurate enough to copy and paste into your home listing. Why? Because, as admitted by Zillow, the tool is often off by 8% or more. That much of a discrepancy can mean a major financial loss when you’re talking about a home price. The tool also tends to price poorly in diverse neighborhoods with widely varying properties. So let’s talk about how you can use the tool to get a ballpark pricing range. To get the most accurate estimate, click here, type in your address, find your home and edit any details that need correcting. For example, if you recently added square footage, edit the square footage shown on Zillow. Then scroll down to the Zestimate details section to view Zillow’s suggested price range for your property.
- Use the Redfin home value estimator. The Redfin pricing tool is lesser known but worthy of you using. It creates an initial estimate based on tax records and recent sales (hard data).
Compare your estimate with currently listed homes in your neighborhood:
Identifying how your house stacks up against other properties that are currently for sale in your area is critically important. With your Zillow/Redfin range in hand, go to a local real estate search site or a national site like Realtor.com. Set filters to match the bedrooms and square footage of your home and see what other properties in your zip code with similar specs are selling for.
Next, review the properties and determine whether homes that are similar but more updated than yours are priced higher or lower than the price you have in mind. Lastly, adjust your price to look good relative to your competition.
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Recognize that you have a bias in favor of your home:
At one point, you picked your home over all alternatives in your area. There was something about it that made you buy it. You likely loved the home and its features and finishes more than the average buyer, and that motivated you to buy it.
And since that time, you’ve created years worth of memories in the home that have continued to add personal value to the space. While a buyer simply sees a driveway, you may see the spot where your young daughter learned how to ride a bike.
The bottom line is – you will always value your home more than other buyers will. But to properly price your property, you must recognize your bias and coldly compare your home to other properties that are for sale in your area.
Keep real estate site filters in mind:
Today’s buyers usually search by setting a maximum price on search sites. Use this knowledge! If you believe your home is worth $510,000, consider pricing it at $499,000 to capture buyers who set their max range at $500,000. The bottom line is, the more often your home appears in search results, the more views you get and the more showings and offers you will receive.
Let your motivation to sell define your bottom line:
You need to determine whether your primary motivation is to sell fast or to get the highest possible sale price. The answer to that question will help you pinpoint the best price and determine your “no less than” price. Do you need a quick sale because you want to buy a home that is about to be listed? Are you trying to move quickly to take a great job opportunity in another state? Or are you just putting your home out there to see how well it’s received by the market?
If you need a fast sell, your best bet is to determine the lowest sale price you’re willing to accept and start entertaining all offers.
If you have time on your side and are pushing to get the best possible sale price, you may be worried that keeping your home on the market for a long time will be a turn-off to potential buyers. Luckily, that myth was recently debunked by the authors of Freakonomics and Stanford University. Agents push for speed of sale because they are highly incentivized to do so. If you sell without an agent, you can take your time and focus on getting the highest possible sale price without risking penalty for doing so.
If you are not comfortable with pricing, get a CMA.
If you aren’t comfortable with pricing, you can get a comparative market analysis (also commonly called a CMA), from an appraiser or a local real estate agent. Appraisers offer a less salesy alternative, as agents often try to earn new business from individuals looking to list their home on their own.
There is a phrase used by agents called “buying a listing.” It refers to quoting a high sales price to homeowners knowing that is music to their ears. Then, once the listing agreement is signed, over the weeks and months that follow, the agent works on getting you to lower your price. Be wary of that when an agent tells you the value of your home. Ask yourself, are they giving it to you straight, or trying to win your favor and your listing?
If you go the appraisal route, there’s a small fee involved in obtaining a professional CMA. But if it means getting a better sale price on your home, it’s well worth the cost.
Now that you know what factors to consider when setting your list price, you can price with confidence knowing you’ll not only attract qualified buyers, but will also get great returns on your home.
Make pricing your home easy with our free step-by-step worksheet:
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