As a homeowner you are not well equipped to determine the sales price of your home. There are just too many emotions that will keep you from being impartial. The trick to price to sell and still make a profit is to price to sell and generate a buying frenzy. Although different markets call for different strategies the end result that you and the agent are looking for is to have multiple offers come through within the same week. This gives a good agent some negotiating leverage.
The asking price you set for your home significantly affects whether you will profit in the sale, how much you will profit and how long your home will sit on the market. Your real estate agent’s knowledge of the overall market and what’s selling – or not selling – will be key in determining the correct strike price. The objective is to find a price that the market will bear but won’t leave money on the table.
Here are some points to consider:
Time. Time is not on your side when it comes to real estate. Although many factors influence the outcome, perhaps time is the biggest determinant in whether or not you see a profit and how much you profit. Studies show that the longer a house stays on the market, the less likely you will receive the top market price for the property. Therefore, if your goal is to make money, think about a price that will encourage buyer activity (read: fair market value). The historical statistics reveal that the first 3 weeks are when you get the most exposure on your property.
Fair Market Value. Determining a market value for your home is what a good Realtor will do for you. The last thing you want to do is price your home yourself and if a Realtor allows you to do this then you should find another Realtor. You want a Realtor that will make an educated decision based on historical trends in your area with properties that directly relate to your own. Realtors have access to this information and a good one understands how to analyze this information and come up with the best fit. The overpriced property WILL chase the market down.
Value vs. Cost. Pricing your home to sell in a timely fashion requires some objectivity. It’s important that you not confuse value with cost – in other words, the value the home represents to you, opposed to the cost that an knowledgeable buyer is willing to pay.. Don’t place too much emphasis on home improvements when calculating your price, because buyers may not share your taste.
Keep it simple. Because time is of the essence, make it easy for the buyers. Remain flexible on when your agent can schedule showings. Also, avoid putting contingencies on the sale. Though a desirable move-in date makes for a smoother transition between homes, it could cause you to lose the sale altogether.