4 Things to Consider when Pricing your Home

Dated: 10/02/2019

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4 things to consider when pricing your home

When it comes to selling a home, all sellers want to get top dollar. When it comes to purchasing a home, all buyers want to get the best value. Consequently, appropriately pricing a home can get quite complicated. For many sellers, the emotional attachement they have to their home can play a large role in their pricing strategy. However, the best priced homes are priced according to data not sentiment. If you follow these guidelines below, you will likely price your home for a quick and efficient sale.

Aovid Overpricing

People are often tempted to overprice their home at first. They reason that maybe there is an individual out there willing to spend that much - so what could it hurt to list it high? There are actually quite a few negative consequences of listing a home too high. The house may sit on the market a long time, postponing your purchase of a new home or forcing you to balance two mortgages. If you are forced to drop the price, buyers may begin to wonder what is wrong with the house. A house sitting on the market for a long time with a dropping price does not make a positive impact on potential buyers. In fact, in that situation buyers may be more tempted to make a low-ball offer.

Don't Expect Dollar-for-Dollar Returns

Many homeowners wrongly expect to recuperate all the dollars (or more) that they spent on renovation projects in a home. While spending a few thousand dollars on new flooring may indeed help sell your home, it is not likely to increase the price by tens of thousands. In addition, some renovations can cause the house to outprice the neighborhood. Expensive and extensive renovations in a neighborhood that does not support them will mean you see a lower return. Different renovation projects deliver different returns on investment. If you're planning on selling your home, it's always wise to investigate ROI's before you renovate, so you can make wise and financially prudent choices.

Use Comparable Sales

The best priced homes use hard data. Real estate agents use something called comps (comparable sales) to determine what homes that are similar to yours actually sold for in the last year. These comps will be the best indicator as to which price you should be at. It doesn't matter how much you think your three bedroom, two bath ranch is worth. If very similar homes have all sold for $400,000 or less, you shouldn't expect to get anything more. After examining comps, a real estate agent can help you come up with a price that will entice buyers to come see your home.

Adjust the Price when Needed

Even when the above steps are followed, sometimes after a home is listed it becomes clear that the price is inappropriate. If there are very few showings that probably indicates your home is priced too high. In addition, if there are many showings with no offers, this also probably indicates that while the home is marketed well, buyers aren't seeing a justification for the price. Home owners who respond quickly to what the market is saying will have much greater success in selling their homes.

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Tricia McCullough

From farming in Warden, WA, to living in Australia and then back to Wenatchee, I’ve always been profoundly aware of the fundamental need to help others. Whether through their financial picture or he....

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