How to Price Your Home for Sale
One of the most essential factors that you should always consider while selling your home is the price. (Duh, right?) Remember that fairy tale – Goldilocks and the Three Bears? While we don’t recommend breaking and entering or sleeping in stranger’s beds, there’s a lesson in there that we can correlate to pricing strategy.
The first bed that Goldilocks tried was too high and too hard. Similar to pricing your house TOO HIGH.
Your house is going to be an exciting commodity for a short period of time. So, you need to maximize that time on the market as much as possible. Knowing that the demand and interest for your house will drastically reduce after 2-3 weeks, you want to make sure you don’t scare the market away by pricing the house TOO HIGH.
When the price is too high, people might look at your house but then they’ll be disappointed. Buyers will expect a certain level of value and if your price is too high, the value always disappoints. For example, if you have a premium price (premium=too high) the buyer is going to expect premium features. One popular feature that’s really trendy right now is countertops. If you have a premium (too high) price then buyers might expect granite or quartz counters. But, if you’re still rocking standard Formica, they’ll be disappointed and won’t see the value in the house for the price.
Goldilocks didn’t want to sleep in a bed that was too high or too hard. Today’s real estate buyer isn’t going to overpay for your house, no matter how much porridge you leave out.
Our suggestion: Listen to the market and react accordingly. If that means reducing your price, act quickly.
The second bed that Goldilocks tried was too soft and too low. Similar to pricing your house TOO LOW.
There’s a theory that if you under price your house – you’ll generate multiple offers. This is a risky strategy, but yes, multiple offers can happen.
But…what if it doesn’t happen? What if you only get ONE offer? Then, you’re sort of stuck because the buyer doesn’t have any incentive to pay more than your list price because that’s all you were asking. Imagine negotiating with a buyer that offered to pay your TOO LOW list price:
“We thought for sure we’d get multiple offers at this price but since we didn’t, we’d like you to pay more than you offered because our house is totally worth it.”
Whoa, good luck with that. Dear Goldilocks is so picky, just like buyers for your house will be. They might not react to your too low price the way you think.
Our suggestion: Don’t play roulette with your equity.
The third bed that Goldilocks tried was just right. Similar to pricing your house at MARKET VALUE.
A solid pricing strategy is to list your house for sale for what it’s worth. Your real estate agent will put a lot of research into finding comparable sales and analyzing all that’s happening in the marketplace. They’ll give you a range of where your house should sell which is considered MARKET VALUE.
If you have a pretty cool house that’s super clean and lots of upgrades, you might try to sell it on the higher side of the market value range. But, don’t go over that range or you’ll be treading into TOO HIGH territory.
Thinking through this strategy, if your house has some blemishes or needs to have some repairs, etc, then you might be best to price it on the lower end of the market value range. This isn’t the same as pricing it TOO LOW because you would price it within the market value range, not below market.
What happened when Goldilocks found the bed that was just right? She took a snooze and then got busted for breaking and entering. Buyers in our real estate market are too smart to do that so they’ll just BUY your house.
Our suggestion: Stay within the market value range and let your real estate agent interpret the market response to help guide you to a sale. If you’re wondering how much your home is worth, we can get you an instant valuation here.