Pricing your home
Determining a sales price is one of the very first obstacles you will face when selling your home. No matter which way you look at it, we have investments in our home, be it personal or financial and it is very easy to let those attachments muddy the water when determining a fair market value. The fact of the matter is that it doesn't matter what you THINK your home is worth unless your only goal is to list it. What matters is what someone else is willing to pay for it. We, as homeowners, tend to overlook a lot of the little things that may diminish value in another's eyes, such as unfinished projects, faded paint, cluttered rooms, etc. When you live in your home every day it is easy to stop seeing what is right in front of you. Just the same, we tend to put value into things that others may not. Your Realtor's job is to look at your home with fresh eyes and give you direction on what needs addressed and what features realistically add to the value of the home. The pricing process is a fairly black and white process. Your Realtor will pull a record of sold properties with similar features to yours. They will add and subtract value based on additional or missing amenities and condition. Every agent has their own perception of what these differences amount as far as value, but consistency is the key. Additional bedrooms have a certain value, but most Realtors understand that a 2 bedroom is not going to value equivalent to a 3 bedroom because of demand. Just the same, 6 bedrooms is not a huge asset over 5 bedrooms because for most buyers it is extraneous. These calculations ultimately produce a selling price that the market is bearing for a comparable home.
Why can't I price high and just come down?
This is a common attitude for sellers. No body wants to leave money on the table, however when you price too high, you are leaving buyers on the table. Your largest number of buyers will see your home in the first 10 days of the listing when it is populating everyone's "new listing" searches. If you are priced out of a buyer's price range, they won't even give you a second look. Imagine that there are several buyers looking for your exact type of home, if you are priced too high those buyers may not look at your home at all, and by the time you drop your price into an acceptable range, they've already purchased other homes that were more reasonably priced. You have to remember that a buyer does not have the sentimental attachment to your home that you do. They are shopping for features and price. What that means, is that the home down the street that has a similar layout and nicer landscaping for 10k less is going to sell first. An additional impact of initial overpricing is stigma. A house that sits on the market for 6 months in a market with an average days on market of 60 days is going to develop a stigma. Agents and buyers alike will view the property as distressed or having a difficult seller to work with and they may not even look at it. Quite often a home that is priced too high initially will ultimately sell for far less than what they would have if it was priced competitively in the beginning.
What about pricing low and hoping for multiple offers?
The DIY and Flipper mentality has prompted some sellers to think about lowballing their home in hopes of a multiple offer situation. It is absolutely true that multiple offers do drive the price up, and the more offers, the higher the price but it is a slippery slope unless you are in an incredibly hot market where demand is far exceeding the availability. If you are in a hot market and you are launching a home with significant amount of marketing and excitement it can be a very successful way to sell. Keep in mind though that you may only see one offer, so make sure that you set a price that you can work with if you do indeed get just one offer.