Updated: Apr 1, 2019
One of the biggest decisions that you will make as you prepare to sell your home is determining the initial list price. In my real estate experience a correctly priced home will dramatically increase or decrease the views and showings your home receives. The list price is an important step, and it is one that you don’t want to get wrong. To give yourself the best chance to picking the perfect pricing strategy, use a qualified real estate agent to represent your best interests and showcase your house. Be sure to avoid the mistakes listed below.
Mistake #1 – Being Unrealistic
The first thing you need to do when you sit down to settle on a list price is committing to being realistic. I love going into homes and seeing all the great touches a homeowner has put into their home. However, just because you put something extremely expensive in your home that you love, it does not automatically mean your home’s value has increased by the same dollar figure of that “upgrade” you put into your home.
A realtor wants to get you as much money as you can for your home. Understand, that while your home has a lot of sentimental value to you, it doesn’t have any of that kind of value to the buyer. The buyer will be picking between your home and several others, and they are going to want to get the best deal possible. Don’t make the mistake of thinking your home is worth more than it is because of all the great memories you have made over the years. Those memories are extremely valuable to you and your family – but they are worthless to your prospective buyers.
Don’t be offended or emotionally charged when an offer comes in much less than you feel it should be or what your friends told you it is worth. At the end of the day, work with your agent and know your goals and what is acceptable or not for this home transaction. Agents play an important role as they are not emotionally charged in the home sale and can help clarify and explain some of the finer details. I have seen home deals nearly unravel over trivial things that are less than .01% of the total home’s value. Consult with your agent, compare it to your pricing strategy, and find a way to counter and make the offer and “A” offer.
I love the technology that helps agents and sellers be sharper in their transactions, but please don’t simply trust what Zillow tells you your house is worth for a concrete pricing analysis. I can almost guarantee it will not be accurate. An agent sees homes every day and with the appropriate comps and experience they can give you a realistic view of your home’s value.
Mistake #2 – The Matching Principle
One of the first things that most homeowners do when they decide to sell is to look at the other houses in their neighborhood that are on the market. Makes sense, right? After all, you should be able to list your home similarly to the other houses in your neighborhood and be right in line with market rates. Or so you would think. However, this is flawed thinking. Some of the houses you might be using for comparisons may have been on the market for a long time. And if that is the case, they are almost certainly overpriced. So, by following along, you might be setting your house at a price that is well above the actual market value. You don’t want to leave your house on the market longer than the “average” days on market to similar homes sold in your area. You are almost guaranteed to sell your house for less the longer it sits.
Also, an agent can help make sure you are comparing the right homes to yours when pricing. You want to compare apples to apples when pricing your home, so you are using realistic comps.
Mistake #3 – Ignoring the Market
The real estate market is what it is – no one is immune, or above the market. People are smart and the majority will rarely overpay for the real value of an item. Many people think that they can do better than the market rate by using tricks, gimmicks, or just by being a difficult negotiator. I’ve learned that true and effective negotiations are built on correct information, real expectations and positive relationships. In my opinion - intimidation, stonewalling, etc. have no effective place in home transactions and in the end don’t fully benefit either party. Realize you are not “giving away the farm” when you treat people fair and right. I believe Carma is real and always comes back.
The goal as a seller is to use your home’s and agent’s competitive advantages to sell your home for the most value that it is worth and in a timeline that meets your schedule.
Recognize you are dealing in the real estate market that exists in your area, for better or worse. In fact, you can’t even outwit the market if someone agrees to pay you too much for your house, because that person is almost certainly going to be turned down by their mortgage lender. The only strategy that makes sense is to list your home for a fair price based on market factors.
When pricing your home, you want to ultimately get in front of the most buyers possible and to find the sweet spot where the market place responds. This can lead to an increased number of offers, potentially selling your home over listing price, and keeping a buyer motivated to complete the transaction on your home The best way to avoid making a pricing mistake when listing your home is to listen to the advice of a real estate professional and working together to find that place that best helps you achieve your home goals. By trusting what you are told by a real estate agent, you should be on the right track toward a listing price that allows you to draw attention to the home while still retrieving fair value in the sale.