The reality is your home is only worth what the market will bear. The challenge is to determine what that is. A Comparative Market Analysis (CMA) prepared by a trusted Realtor® can provide you with the information you need to price your home. CMAs are often offered as a free service by Realtors. If prepared by a one who knows your market you will receive a fairly accurate range within which you can price your home. Pay attention to the average amount of time homes are on the market in your immediate area. This will also help you determine where to set your asking price.
If home prices are trending upwards you may be tempted to set your price high. However, overprice your home and risk having it sit on the market too long – which could be a very costly mistake both in time and money. Even if you do get an offer, the home may not appraise at the higher price which may make it impossible for the buyer to secure financing. Overpricing your home can make you appear unreasonable or unknowledgeable. Many buyers will not make an offer because they are concerned you will be insulted.
If your home sits on the market for a long period of time some buyers may assume you are getting desperate. That’s when the below-market offers start to appear, which can be very discouraging. After a while you will have to lower your price. By then you may have missed a few opportunities to have sold your home. I have seen some overpriced homes taken off the market for a period of time and then relisted at a more competitive price – a lot of time and money wasted. Don’t base your price high because the market trending upwards. If prices are trending upwards, buyers will make offers accordingly and bid price up to what the market will bear.
I recommend my clients to price in the upper-range only if there is something about their home that makes it stand out from the competition, such as a more desirable model or floor plan, or their home is in a much-sought-after neighborhood with very low inventory.
If there are a fair number of similar properties selling in a short period of time in your neighborhood then pricing somewhere in middle to high end of the range is recommended. However, if you need to sell quickly, set the price in the lower end of the price range to be competitive. In a seller’s market or in a market where prices are trending upwards, this strategy may produce multiple offers and even a bidding war. The market will bring the price up. If you price your home in the lower range when the market is trending lower you will be ahead of the trend making it more likely that you will sell your home. And you don’t want to be caught in a situation where you must continually reduce the price, chasing the trend.
Things to remember:
- The real estate market is local. What is happening in New York has very little bearing on what is happening in Jupiter. In fact, even markets in adjacent neighborhoods can perform differently.
- You can not sell your home for any more than a buyer is willing and able to pay.
- Don’t worry about where the market is trending. Even the most seasoned professional can not predict the market. Price it right for the current market and it will sell.