PRICING YOUR HOME WHEN LISTING
PRICING ABOVE MARKET VALUE
Say we push the envelope on price and list your home above market value, what will happen? The pros are that you may just find that perfect buyer and set a new value for your home and the neighborhood. However, this is not a likely scenario.
What’s more likely is a situation that would fall under the “cons” category of pricing your home above market value. More often than not, this strategy will have you headed towards too much time on the market and/or an expired listing.
To sell your home, you need to attract the attention of not only buyers, but the agents who represent those buyers. Oftentimes when a home is overpriced, agents won’t even mention it to their clients. They will know that it’s overpriced and not waste their own or their client’s time showing it.
In today’s market, where everyone begins their home search online and sets price filter preferences, there’s a chance that your overpriced home will be missed by realistic buyers. My job is to be open and honest and keep the end goal in mind – selling your home for the best price in the quickest manner.
If you were a buyer and came across a home that was overpriced, naturally you’d think to yourself, “why?” And then you’d wonder if it was worth your own or your agent’s time to find out the answer to that question. Don’t make it more difficult for buyers to find your home.
Let’s say you do find a buyer for your home that’s priced above market value. In order for them to obtain a mortgage, the home will need an appraisal and appraisers often look at the comparable homes in the neighborhood to determine value. If the appraiser does not feel the home is worth what the buyer has offered, this can cause financial problems for the buyer and the sale will most likely fall through.
PRICING AT MARKET VALUE:
Just like there are pros and cons for pricing your home above market value, there are pros and cons for pricing it at fair market value. Certainly you want to get the most money for your home as possible, so it can be appealing to price over market value. But like the previous section explained, that’s not always the best idea. Pricing at fair market value gives you an advantage in the following areas:
- Exposure Online
With buyers today starting their home searches online, the first bit of criteria they typically enter is price. Every buyer is looking to get the most ‘value’ for their money, but there’s a range in which they’re looking. By pricing at market value you increase your chances of showing up right in front of a buyer who can feasibly afford your home.
- Appealing to other agents
When other agents who represent buyers see your home listed at a fair market value price, they will be more motivated to bring their buyers to look at it if it meets their criteria. It won’t leave them wondering why the home is over or under priced.
- Easy Appraisal
Pricing your home at fair market value makes the appraisal process go smoother and doesn’t hold up your buyer getting their mortgage. Being realistic with the value of your home can lend to a smoother transaction all around.
The downside of pricing your home at fair market value depends on how you look at it. Certainly, there is a chance you could potentially be leaving money on the table, but that’s what negotiating the transaction is all about.
My job is to help you get the most money for your home and in the quickest amount of time. Accordingly, there’s still one more pricing strategy to discuss before we could come to a conclusion on what price to list your home for.
PRICING BELOW MARKET VALUE:
Pricing your home below fair market value does not necessarily mean that it will sell below fair market value. When you price your home lower, you can often times create a bit of a frenzy among buyers and, therefore, create competition, driving up the price.
Have you ever watched an auction? It’s like that, where everyone wants to acquire the home for a bargain, but the demand and attention it gets from other buyers increases the resulting sale price.
This pricing strategy only works well in certain markets. As your real estate agent and depending on the nature of your market, I will help you determine if this approach is right for you.
Traditionally, this strategy works the best in moderate to high inventory markets. In a market with low inventory (when most listings are getting multiple offers) this approach might not be ideal.
So if pricing your home below market value is right for you, here are a few pros and cons to understand first:
- Creates a frenzy and attracts more buyers and multiple offers
- Quick on market time frame
- Final sale likely to be over asking price
- Buyers bidding on the lower number may not be qualified or capable of getting financing for the actual/intended sale price
- Not enough demand could result in a sale lower than market value
- Might not attract the right buyer