In the market place, pricing your home correctly the first time goes a long way. You have to realize that home buyers have access to lots of information on the internet, and they are well prepared when starting the home buying process. Long gone are the days when the information was only available to real estate agents.
There are many steps a realtor uses to determine the fair listing price of your home:
- Recently solds. Realtors will look into what homes recently sold in your area and what they sold for. This will help determine what houses in your neighbourhood are selling for.
- Comparables. Realtors will research to find homes that compare to your home. Number of bedrooms, baths, garage spaces, upgrades etc.
- Market Conditions. The market conditions in your area will play a part in how your house should be priced. If you are listing your house in a slower time or a dip in the market you will want to price your home more competitively.
- Current Market Inventory. Are there a lot of homes available to buyers to choose from…is it considered to be a buyer’s market?
- Current Listings. What are your neighbours selling their houses for? The price of your neighbours house will affect your price and the prices of other houses in the neighbourhood.
Home owners give many reasons for wanting to price their home higher then their neighbours house down the street.
- I’m not in a hurry to sell. You may not feel like you are in a rush to sell so therefore feel right in pricing a little higher. But once your home sits on the market, people start to wonder…what’s wrong with it? If no one has bought it by now, there must be something wrong.
- I want to have room to negotiate. Many home owners think that they need to have the price much higher then the price they are willing to accept so they have lots of space to negotiate.
- I think my home is worth “this”. Home owners have the emotional connection to the home that not everyone else does, so it is quite normal for this to be a factor. But you have to realize that buyers and realtors are looking at the market and don’t have the emotional connection. They just know what is a fair market price.
- I can always lower the price later. Sure you can do this…but again, you will still have buyers wondering what is wrong with the house and why it’s just sitting on the market.
- My home is much nicer then the one that sold down the street. Your realtor has done the research and is trying to price your home to get you the most money they can. You may have done some renovations but the home down the street may have had a brand new kitchen with granite countertops.
- I need to sell my house for “this amount”. It’s quite understandable that you may need to make a certain amount of money on your house sell. But keep in mind that a buyer is not going to over pay for a house just because you need more money. It works the same when you go to buy a house…are you willing to pay more because the seller needs the extra money. I don’t think so.
- Another agent told me that my house is worth more. You have to realize that not all agents have your best interest at heart. If you have interviewed 5 agents and all but one is telling you the same price…chances are that 5th agent isn’t being honest and is just telling you what you want to hear.
The price of you list your home will determine how quickly you can sell it. By overpricing, you are potentially giving buyers reasons not to come see your home. Buyers will not want to waste their time. You are now losing out on buyers who would have otherwise viewed your home and possibly made an offer. You may also help sell other houses in the neighbourhood. Buyers will now see the value in the lower priced house down the street. And in the end you may end up losing more money then if you had priced it right the first time. The longer your home sits on the market, the longer you are paying out holding costs.
There are agents out there who will agree with you and list your house for the higher price. But honest, professional agents will know when a house is over priced and walk away. Why would an agent take your listing if they know it’s over priced? Well to some it’s another listing…more advertising and they may pick up buyer clients.
Look for the signs. If your home is sitting on the market, you are not getting any showings or offers, then its time to realize that it’s probably priced to high. Listen to your realtor, they have the numbers. Adjust your price accordingly.