Sometimes sellers are confused about what market value means when thinking about a list price for their home. As your Boise-area real estate experts, we want you to have a clear understanding of what goes into pricing a home to sell it at the best price in the shortest amount of time.
Common Mistakes to Avoid
Unrealistic financial goals— It’s easy to let desires and dollar signs get in the way of setting the correct price. Our goal is to set a price that will attract at least one buyer and preferably more than one! In this market, receiving multiple offers allows you to negotiate the highest price and best terms with the most qualified buyer. However, it doesn't matter what you want, what you paid, what you owe, or what your neighbor's house sold for, you must attract a willing and qualified buyer and you need to know where the home will appraise.
In this market, sometimes buyers are willing to pay more for a home than where it will appraise. However, it’s critical to know the data an appraiser will review so you can evaluate incoming offers properly and make sure you’re protected in the event the home appraises too low. You don’t want to go under contract with a buyer only to have the home appraise lower than the purchase price, because then you’ll have to renegotiate after other prospective buyers have already moved on.
Pricing too high— Pricing your home too high with the idea of reducing it later can cost you money. Sometimes sellers worry they will leave money on the table and want to ‘test’ a higher price than their agent recommends. However, this can be a lethal strategy as buyers will likely make low offers, if they make an offer at all.
Overpricing endangers your goal of selling the home quickly and for the most money and instead keeps it on the market longer causing it to likely sell for less. A home that stays on the market for too long becomes 'time worn'. Buyers assume something is wrong with it, get nervous about making an offer, and then you don’t get the auction-like environment that allows your house to sell for its max price.
A Tested Pricing Strategy
In my view, pricing your home to sell for maximum profit requires that your real estate agent evaluate four things:
Data— Your agent should research sold, pending, and active homes that are similar to yours in size and amenities and review their list and sold prices and the amount of time it took them to sell. Unlike most agents, we do this collaboratively with you!
History — Did you recently have your home listed with another agent and it didn’t sell? If so, history will tell you the price where it was listed likely was too high. History is not always available.
Experience— The experience of your agent and any colleagues they might consult about your house or neighborhood. If your agent thinks they know it all and is too proud to consult others, they are not fully utilizing all the expertise they could in order to perfectly price your house.
Gut— Gut instinct or is basically informed intuition and takes into account the above three factors, as well as, the current competition for your house, whether the market is increasing or decreasing, if your house looks particularly amazing all dolled up, etc.
Successfully pricing a home perfectly using the above four tactics takes years of practice and tons of experience to develop. Determining perfect pricing on a client’s largest financial asset is an art and not a science — although skill at both is required to get it right. Don’t trust your financial future to just anyone. Work with an experienced agent who can ensure you price correctly and net the most money possible in the shortest amount of time!