Optimum pricing for a home that encourages a timely sale is no walk in the park for sellers or realtors. Failing to price your home correctly leads to your home remaining on the market longer and fetching a lower price.
The importance of pricing a home correctly is crucial especially in the current market where home buyers are equipped with all the information regarding your home. They are unlikely to pay a dime above the correct market value and will avoid any home that has been on the market for an extended period of time. Contrary to popular belief, pricing a home above market value doesn’t mean it will fetch a higher sale price. In fact, a home that’s correctly priced from the onset has been found to fetch more money.
5 Factors To Consider When Pricing Your Home
If you plan to sell your home, you must first be up-to-date with the real estate market in your area. The price you set must be competitive enough to attract clients. If the market is in a slowdown, you can either wait it out or you can set your price more aggressively to compete with the rest of the houses on the market. Waiting it out can however be risky as the market can dip even further forcing you to sell at an even lower price.
This is the most common method of value determination. It involves gathering information on other similar properties in your locality and the market value they sold for and using it to price your home. Depending on the density of your locality, you may have to search for a few blocks or several miles.
While the value of the sale of similar properties is common, it is paramount that you examine the prevailing conditions during the time of sale of those properties. If some conditions have changed that can affect the value of the property, these must be factored in before setting the price. This is one of the factors that make having a realtor who understands the local market very important.
Homes that are under contract give you an insight of what is taking place in the market and are thus critical in the determination of the price of a house. However, one can’t know the value the property sold for until after it closes. A realtor can only reveal the sale price of a home after the seller gives them express permission to do so otherwise it will be against the code of ethics. Nonetheless, it is possible to take an informed guess based on how fast the house went under contract. The faster it went down the more likely that it’s under contract for the asking price or a figure very close to it.
The current home inventory in your locality lets you know just how competitive the market is. If the houses for sale are many in number, you have to set a very aggressive price to give your house a competitive advantage over the others. Fewer houses for sale provide an opportunity for you to fetch more money as the number of buyers is huge. Whatever the market situation, the goal is to give your property a competitive advantage.
The sale price of your house should be based on the value of the sold properties in your area. Many realtors and home sellers repeatedly make the mistake of basing their price on the price of the unsold houses in the neighborhood. Others base the price on what they think their home is worth, ignoring all other market factors. These mistakes end up being very costly for the seller as they tend to make a house last longer on the market which further drives away potential buyers.
Mistakes Made In Pricing A Home
Zillow contains the aggregate value of millions of homes and can’t be used to accurately determine the value of an individual house. Sellers always want to believe Zillow when it overprices their home but are quick to criticize an undervaluing. This estimate should never be used to price a home.
Assessed values are used to determine the amount of tax one owes the local authority and are in no way a correct reflection of the true value of a house. What makes it even more inaccurate is that they are usually outdated and the real estate market is an ever-changing industry where the value of a property can change drastically in a few months.
These appraisals are usually incorrect especially because they are done by the mortgage companies to benefit them. These companies usually make the appraisal generous in relation to the market value and many sellers hold onto this as they want to sell their homes at a high price.
Some real estate agents tend to inflate the value of a house to ensure they get the listing, especially if the seller is interviewing multiple agents. In most cases, the home seller will believe the inflated value because everyone wants a higher price than their house deserves. This is quite common and one should always carry out an independent valuation even before one hires a real estate agent.
While setting the right price is important, sometimes one may fail to do so and need to readjust the price. This should be done quickly to avoid giving home buyers a negative perception among buyers.
About The Author
This information was provided by P3 Homes Group, a reputable and nationally recognized market leader in real estate solutions.
We service real estate sales in the following Chicago areas: Naperville, Winnetka, Saint Charles, Geneva, Batavia, Plainfield, Wheaton, Wilmette, Hinsdale, Northfield, Northbrook, Glencoe, Glen Ellyn, Glenview, Deerfield, Deer Park, Lake Zurich, Lake Forest, Lake In The Hills, Huntley, Algonquin, Buffalo Grove, Inverness, Palatine, Barrington, South Barrington, Wayne, Winfield, Warrenville, Aurora, North Aurora, Elburn, Kaneville, Maple Park, Hampshire, Sugar Grove, Lisle, Downers Grove, Park Ridge, Niles, Des Plaines, Norridge, Roselle, Morton Grove, Wheeling, Mundelein, Oakbrook Terrace, Lake In The Hills, Oswego, Carol Stream, Campton Hills, Bloomingdale, Elmhurst, Elgin, South Elgin, Hoffman Estates, Streamwood, Bartlett, West Chicago, Arlington Heights, Barrington Hills, North Barrington, Vernon Hills, Hawthorn Woods, Lincolnshire, Westmont, Kenilworth.