Pricing a home is a complicated decision that will have a huge impact on how quickly you sell. Lowballing could mean a quick sale, but then you are losing out on potential profit. Highballing could mean sitting on the real estate market not moving, and losing the initial buzz of being a new listing.
So how do you pick the right price? Let's take a look at some common pricing mistakes:
1. Pricing to "Wait it Out"
If you aren't in a hurry to sell your home, you could think that pricing high and hoping the market rises to match your listing price is a safe idea. So you price at 450,000 instead of 400,000 for one reason or another, 50,000 higher than any similar home listed.
This is likely to lead two different scenarios. Either the market never improves and your home is constantly a sore thumb, or the market improves, but your home is "old news." People like listings that are "fresh and new", the same way shoppers are more likely to buy brand new jeans than a pair you've seen the rack for several months.
2. Overpricing amenities
Unfortunately, you aren't going to get 100% of your improvement investment back when you sell your home. Let's say you had new countertops put into your kitchen, and it cost $10,000. Your gut instinct might be to price at $410,000 instead of $400,000.
But that's just not how it works. You've probably heard that the second you drive a car off the lot, it depreciates in value. You should consider it similar for anything you use within your home.
It doesn't mean your amenities aren't a highlight that will help your home sell- but don't over-inflate your price.
3. The .99 trick
Retailers tend to price a loaf of bread at 2.99 versus 3.00, because it's a psychological marketing trick to make consumers feel like they are paying less. It makes sense, especially if they are casually putting items into their cart.
But a home is not a casual purchase. Buyers are going to do research, often using online search filters. Let's say you price your home at 399,999. A potential buyer is looking at homes online within the 400,000-500,000 price range... and doesn't see your home! See the problem?
4. Pricing Based On Your Neighbor
If someone else in your neighborhood is selling their home, your first instinct could to be jump on the bandwagon and charge the same amount. But just because they are listed at that price, doesn't mean they will sell at that price.
Your neighbor could easily be falling into one of the pricing mistakes in this list, or be receiving unrealistic advice from their realtor. Also, you probably haven't been inside the home. Are there extra bedrooms or other features that might push their price to be higher?
5. Pricing Based On What You Paid
If the market is lackluster, expecting to get what you paid for your home is unfortunately unrealistic. Of course, in the ideal world you get a profit. But if you need to move now, you have to price based on today's market if you want to sell.
Sellers won't know or care what you originally paid for your home. This may sound harsh, but it's the reality. Think about it from their perspective. When YOU are shopping for your next home, what is going to be your major concern? Probably the best price you can get for a home you like, right? Same for buyers looking at your home.
The market is constantly changing. So if you are worried about pricing your home correctly, know this isn't a decision you have to make alone! You can trust an expert who's job it is to constantly keep up with the fluctuations. Click here to receive a FREE customized report for the value of your home.