How to Price Your Home Right

Selling a home isn’t as simple as taking a few photos and putting a property into the multiple listing service. There’s much to be done, and, if you’re going to sell your home, you obviously want to do so in a short time and get the most out of it. Some sellers try to skimp to save, trying to minimize their expenses, by forgoing such things as repairs, staging, and refreshing with new kitchen and bath towels, new shower curtains and liners, and more. That’s often a mistake and they end-up having to do those things or to relist and lower their listing price.

If you’re willing to put the time and effort into selling your home, you ought to make the right choices, and of course, to price your home right. It’s not just about local market value, there’s more to it than this factor, and, you’ll understand why when you look at the various details.

Understanding Buyers’ Mindsets

Right now, home prices are steadily climbing, interest rates are low, the FICO credit score modeling has changes, and lenders have loosened their requirements. This all adds-up to a thin supply of inventory, which is a good thing if you’re selling. With such a landscape, you’d think that pricing your home just a bit under market value might start a bidding war, but new research conducted by the Journal of Economic Behavior & Organization found that’s not true. In the study, homes priced between 10 percent and 20 percent higher than similar homes drew more attention.

“Experienced Realtors will tell you that pricing your home appropriately from the beginning is critical to getting it sold quickly and at the best price. Research shows that overpricing your home and then dropping the price several times while it languishes on the market usually leads to selling it at a much lower price than what you originally should have asked for it. The longer a home stays on the market, the deeper the discount is likely to be off the original price.” —

The reason for this is a psychological one, and, it’s called “anchoring,” and, it’s quite interesting on how it works. Consumers, home buyers included, tend to anchor or base their judgment on the first price they see. In other words, you might encounter a sale item at a local retailer, saving 20 percent off a $100 product, with a sale price of $80. Even though a consumer might later see the same thing in another store for $65, he or she will still prefer the one on sale.

Home buyers do the same and they also tend to make judgments based not only on price, but also, on appearance. So, get in a buyer’s frame of mind as you’re readying your home for sale and declutter, deep clean, depersonalize, and refresh where you can.

How to Price Your Home Right to Get It to Sell

To settle on the right listing price, you’ll need your selling agent to give you some information and a sage opinion about the local market conditions. Here are some ways to price your home right to get it to sell:

  • Don’t overprice for negotiation sake. Some sellers believe if they price their properties just over market value, it will give buyers room to negotiate down to true market value. Don’t count on anchoring to be hard-and-fast mindset, because buyers are going to shell-out hundreds of thousands of dollars.
  • Study comparable, recently sold homes. Another mistake made, especially by those who go the for-sale-by-owner route, is to base their asking price on comparable homes still on the market. Those prices aren’t selling prices, meaning they are informative, but certainly not something to set your listing price on.
  • Get a professional appraisal. Hire an appraiser before you put your home on the market. This will help you avoid the unpleasant surprise of learning your property isn’t worth what you believe and possibly derailing a future deal.

Another due diligence step you can take is to tour like homes that are also currently listed for sale. Inquire about buyer interest and use that information to your advantage.