It’s a brand new market in 2019 and if you’re preparing your home for a spring sale, you’re probably also wondering about setting its listing price. In some cases, it might be that what you thought your home’s asking price would be when it made its debut on the market has changed in the past year. But any year, whether it’s a buyer’s or seller’s market, assigning a price to a house is a complicated. You made memories there and you’ve got a major financial interest in the place, too. Price too high and your home could sit on the market for months or even a year. Price too low and you might have seller’s regret for the foreseeable future. You want to hit that sweet spot for home shoppers. Read on for some pricing advice.
The wrong price may mean the house sits on the market, which can create the vibe among buyers that there’s something wrong it or not a cool place to live.
While your market may be different, the national average for a home to be on the market was three weeks in 2018. But this year we’re seeing homes on the market for a bit longer, as the market shifts in its new direction.
It’s your agent’s job, as the real estate expert — mining his or her expertise and knowledge of the market — to determine the best price for your home. But it’s your house. You need to have your own idea of how much your property is worth. Here’s how to get it.
Talk to Your Agent
Your agent should bring the right mix of industry expertise and knowledge of your local market and a familiarity with your house to the table.
Use what you learn about your home’s fair market price to evaluate any price your agent recommends.
Throughout the pricing process, a good agent will:
- Listen to your needs
- Take into account your research
- Use knowledge of the local market to help you pick the best asking price
Consider you and your agent are a team. It’s in both of your interests to price your home correctly. A timely and profitable sale is win for everyone. As we always say in real estate, time is of the essence.
Don’t Check the Internet
Your first impulse may be to get online. Property websites like realtor.com® and Zillow base their estimates on your home’s square footage and real estate data they’ve collected, such as recent home sales in your local market.
But those results are estimates based on generalized factors, not your unique situation. They don’t know the upgrades you’ve made, the new paint job, the stainless steel appliances, the architect behind your house, etc. If at any point the price you see in an online calculator doesn’t align with what your agent suggests, prioritize the agent’s advice.
Online estimators also have a reputation among real estate professionals for misleading buyers and sellers with less-than-optimal pricing information. So my advice? Don’t listen to them. In my experience they are often less than ideal and can only set you up for disappoint. What to do instead? Trust your real estate agent. That’s what your agent is here for, to impart their wealth of knowledge about the current market to you. You’ve signed a contract with them, so feel free to put them to work!
Know Your Local History
What your home’s listing price should be largely depends on what similar homes, or “comps,” recently sold for in your area. To price your home, your agent will run the average sales prices of at least three comps to assess your home’s value.
What constitutes a comp?
- Age
- Location
- Square footage
- Number of bedrooms and bathrooms
Agents will look into the difference between each comp’s listing price, and the price it sold for. He or she will consider price reductions and why they happened, if relevant. All the while, your agent will also rely on inside knowledge of housing stock and the local market. That nuanced understanding is invaluable, particularly when measuring the unique aspects of your home with raw data.
When selecting comps, agents generally look for properties that sold within a one-mile radius of your home, and in the past 90 days. Agents find these homes using the MLS, a regional database of homes that agents pay dues to access.
Size Up the Competition
Your agent will also look at properties that are currently for sale in your area. These listings will be your competition. But because listing photos don’t always tell the full story, a good agent will check out these homes in person to see what condition they’re in and to assess how your home sizes up.
You can do the same. Go out and see some houses in person. Play the house hunter and see what you like and what you don’t like. If you tour a house and think, “One million for THIS?” let your agent know.
Understand the Market You’re In
The housing market where you live can greatly impact your pricing strategy. If you’re in a seller’s market, where demand from buyers outpaces the number of homes for sale, you may be able to price your home slightly higher than market value.
But if you’re in a buyer’s market, where buyers have the advantage, you may have to price your home slightly below market value to get lots of people interested. In some markets, for example, it could make sense to price your home slightly below its fair market value to spark a bidding war.
But, of course, there’s no one-size-fits-all playbook. If you’ve got a great agent, they’ll know what’s up.
At any point, you can ask your agent to help you make sense of how your local market will influence your home’s price.
Put Your Feelings Aside for a Bit
As previously mentioned, many sellers think their home is worth a lot more than it is and they want their agent to overprice to test the waters. Don’t do this! Big mistake. Huge. The wrong price will delay your sale, and some agents say the fresh factor wanes after 30 days or 60 days.
The lesson: As much as possible, set aside your emotional attachment to your home. It will make it easier to accept your agent’s realistic, clear-eyed calculation of its price.
Be Savvy With the Dollar Amount
Pricing your home requires careful attention. In some cases, fair market value may not be precisely what you should list it for — and the reasons can be subtle.
For example, if comps show that your home is worth $910,000, setting that as your asking price can backfire — the reason is that buyers who are looking online for properties under $900,000 won’t see your home in search results in that case. This explains why many agents use the “99” pricing strategy and, for example, list $900,000 homes for $899,000. The idea is to maximize exposure.
Keep Your Head in the Game
You’ve considered your agent’s advice, and the two of you have agreed on the right price for your home. It’s time to put your home on the market! Congrats!
Even after the listing date, price should be an ongoing discussion between you and your agent. Markets are fluid, so it’s possible that you’ll have to make tweaks throughout the process in order to get your home sold.
In any case, it’s important to to stay in continuous dialogue with your agent. Together, keep your eyes on the price and the prices of other homes closing escrow while you’re on the market.
Best of luck!