How do I price my home for sale?
If you want to sell your home sooner rather than later, it’s important to price your home effectively. Too high of a price may discourage buyers and cause your home to stall on the market, while too low of a price could burn any potential profits.
To price your home, assess how urgently you need to move, start with online valuation models, conduct market research (either online or with the help of a local agent) and consider getting a professional home appraisal. With these steps, you’ll determine the best price for your home.
When you list your home matters
Can you afford to wait? If you need to move by a certain date, you may need to compromise on price. Many local homebuying operations can buy your home quickly and with cash, but you may not get your home’s full market value.
On the flipside, if you can afford to wait and decide to take on a real estate agent, you may get a better offer. You may even face multiple offers to choose from.
Another thing to consider is whether the profit from your home sale will cover the cost of your next home. This includes closing costs and insurance—not just the sale price! Additionally, this may require waiting for the best possible offer or implementing upgrades, which may not be immediate.
Selling a home during the high season
Spring and summer are the most popular months to list a home for sale. Even if you don’t have kids on summer break, many buyers take advantage of the summer vacation season to begin looking.
The downside is that, depending on your neighborhood, you might face increased competition with other homes on the market.
Use automated valuation models
A good first step before doing market research or hiring a real estate agent is to get a ballpark estimate of your home’s value. In today’s digital-first world, you can find many online tools that provide this service.
This loose estimate can help prevent any disappointing surprises and manage expectations for your appraisal.
These automated tools may consider your home’s:
- Lot size
- Number of bedrooms and bathrooms
- Value compared to other home sales in your immediate area
Play around with models from multiple sources, as the algorithms may slightly vary in calculating the price.
Research your market
Whether you’re doing your own market research or getting help from a real estate agent—which is recommended, since this is their area of expertise—it’s crucial to understand neighborhood trends.
An automated valuation model won’t take into account every timely detail that influences home sales in your area. A local real estate agent will know niche trends, have first-hand knowledge from other real estate agents and be familiar with local buyer preferences.
A real estate agent can complement your own market research by providing specifics about:
- The number of homes sold in your neighborhood
- The average number of days a comparable home has spent on the market
- Successful local listing and sales pricing
- Whether any upgrades or updates could be to your advantage before listing
- Trends buyers are looking for, from amenities to styles
When to underprice a home
Depending on local market trends and your own personal preferences, your agent may use different pricing tactics to sell your home faster. One common strategy agents use is underpricing, though this isn’t a solution to every situation.
By looking at local trends and buyer activity, they may price your home lower to create a bidding war and increase interest in your home. By pricing your home as a fantastic deal, the listing can generate more open house showings. This extra exposure is to your benefit.
Buyers have done their homework
Sellers aren’t the only ones privy to market research though. Potential buyers can easily find trends on online home shopping platforms. Real estate agents know this, and they may give you cautious advice not to aim unrealistically high. Savvy buyers are more likely to spot an overpriced home than before.
Consider a professional appraisal
A professional appraisal is the most accurate way to price a home. It considers factors like lot size, special features, upgrades and amenities. This complements the work of a real estate agent who prices your home based on market comparisons and neighborhood trends. Altogether, you’ll get a solid home price determination, and this could be especially worthwhile if you haven’t had an appraisal in a long time.
Keep in mind that the buyer will conduct their own appraisal anyway, as their lender will need that to determine how much they can borrow for their mortgage. Even an eager buyer may hit a lending obstacle if the home is overpriced.
When it comes to selling your home, there are a plethora of resources available to make pricing a little bit easier. By integrating the steps in this article, you’ll be able to come to a satisfying and just conclusion about your home’s value. Ideally, you’ll be using your home sale to help fund your next home purchase, so speak with one of our loan officers to figure out how much you can be approved for.
The above information is for educational purposes only. All information, loan programs & interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.