Pricing Your Home to Sell
The most important (and often the most difficult) challenge you will face in selling your home is how to price it. You certainly want a price that is competitive with prices of other properties on the market – no offers is NOT where you want to be – yet you want the price to be high enough to bring you a decent return when the deal is settled.
Most sellers fail at this challenge. Probably 2/3 to ¾ of all sellers make the mistake of overpricing. This results in their home sitting on the market for months with the average seller reducing the asking price twice before the home sells.
Why does this happen so frequently?
Many sellers price their home based on what they “need” to get for it. They start with what they paid for it and then add on money for a variety of reasons. The the seller “needs” or thinks he needs may be far from the market value of the home (what a buyer is willing to pay).
Sellers also get attached to their homes and thus the home value. To you, your home is special and this can cloud your judgement and affect your decision making.
Especially when emotions get involved, many find it very difficult to accept the “current market value” of their home. Denial is a natural way we react to bad news.
People also often think that you have to start off with a high asking price in order to settle for the right price after negotiations. The facts and statistics show that the opposite is true. A home that is priced correctly will usually sell for very close to the asking price.
So – how do you come to the right asking price? The simple definition is that a home is worth what it sells for. Since this is knowledge you can only have after the sale has happened, you look at recent sales of similar properties in the same or similar neighbourhoods and use those numbers to estimate your selling price. Keep in mind that improvements normally add very little to the price of a home so don’t simply add in the cost to you of renovating and decorating.
The pool of buyers is small – you want to maximize the number of people who want to see your home. You certainly don’t want to narrow down the field by adding extra constraints that are purely a function of your ego.
You will likely have better luck by starting with a lower price and being firm on it than by starting with a higher price and negotiating. Buyers have choices so your home has to compare favourably. The longer your home is on the market, the less it will sell for.
Call me. I can help you through this most difficult home-selling stage.
Kris
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