Setting the price of your home is one of the first steps of the selling process, and one of the most important. After all, the longer your home languishes on the market, the lower your chances of an eventual sale, so setting an initial price that will attract strong interest could make the difference between a long and ultimately frustrating wait, and a quick, lucrative sale.
But setting that price isn’t as easy as picking an arbitrary number. A smart seller will study their market, consider the mindset of buyers, and consult with an experienced local agent to come up with a realistic price that offers everyone value.
Here are five strategies you can use to price your home, whatever your selling goals are.
Set Your Price Low
If you find yourself selling in a buyer’s market, in which the supply of homes on the market outnumbers the population of buyers, you might consider pricing your home low to set yourself apart from the crowd.
While you might hesitate to deliberately under-price your home, keep in mind that your home won’t necessarily sell for the list price. In fact, if this strategy is successful, you’d ideally attract multiple buyers. And what happens when you have multiple buyers vying for the same property? That’s right: a bidding war. Counterintuitively, pricing your home low could net you a haul that’s well above your initial asking price.
Price Your Home with a CMA
Your home is likely the largest investment you’ll ever make, and the site of the last several years or decades of your life. As such, it’s going to be hard to look at it without your emotions coming into play. So when it’s time to sell, how do you arrive at an objective, market-supported price, divorced from your subjective hopes and emotions?
A comparative market analysis (CMA) is the best tool possible to determine the “true” value of your home. A CMA compares your home to similar properties in similar neighborhoods and circumstances that have recently sold, and takes multiple factors into account to arrive at a suggested price. The number produced by a CMA is, in theory, a market-supported, actionable price for your home that will attract the largest possible number of buyers.
Using a CMA to price your home is a great alternative for people who might be tempted to “go with their gut,” or are motivated for a quick sale at a price that feels fair to all parties.
Choose a Time-Sensitive Price
Every market experiences fluctuations based on buyer demand or seasonal circumstances. For example, in northern states, home prices often bottom out in the dead of winter, when snow and ice keep many prospective buyers from attending open houses.
On the other hand, home prices shoot up in the spring and early summer, when buyers flood onto the market, and spike again in late summer and early fall, when buyers rush to settle into a new home before the start of school and the holiday season. The total difference between the peak and the trough in many markets can be as much as 20% or more.
So if you were going to try and time the market with your price, you’d research your local market to find the peak and the trough. If you were selling at the peak, you could confidently price your home high, knowing that demand in that period will also be high. You could also price your home modestly, if you wanted a quick, easy sale. On the other hand, if you had to sell in the trough, you’d want to set your home price low, to attract interest.
Set Your Price High (But Adapt, If Necessary)
Sometimes you just have to follow your gut, even if your friends and family, your real estate agent, and your CMA are all telling you that you should strongly reconsider. If you really feel that you must price your home high, then do it. But if it doesn’t attract any interest, be prepared to admit your error, and slash your price.
And while setting a very high price on your home doesn’t give you the best chance of closing a sale, it wouldn’t be accurate to say it never works. As the saying goes, it only takes one buyer, and if you’re in a strong seller’s market, it only takes one buyer to fall in love with your home to prove all the naysayers wrong.
Reverse Engineer an Online Price
In this day and age, over half of buyers found their future homes online. That means that sellers should consider exactly how online property sites like Zillow work, and price their homes accordingly.
These sites typically let buyers set a maximum price that’s adjusted in increments of $25,000 or $50,000. To maximize your home’s exposure, set your home at one of these round numbers. For example, if you price your home at $205,000, and a large portion of home buyers are setting their maximum price at $200,000, you’re missing an opportunity to get in front of a huge part of your potential audience. Can this mean missing out on an extra few thousand dollars? Yes. But it could be worth it, if you end up getting in front of the right buyer.
Of course, all these pricing strategies involve making adjustments from an accurate “true” value for your home. Getting a CMA is always the best way to arrive at that value. A typical real estate agent can arrange a CMA for you, but it can cost several hundred dollars.
However, if you team up with a Clever Partner Agent, they’ll provide a free CMA as part of their full service, flat fee package. If you’re ready to sell your home, and want to maximize your profits with a strategic pricing strategy, contact us today for a free no-obligation consultation!