Pricing Your Home to Sell
Finding the Best Listing Price
When you’ve decided to sell, one of the first questions you might ask is “how much should I sell my house for?”
The most common and often easiest way to find your list price is to use the comparative sales approach. This method takes into account your home’s location, size, features and condition, and then compares it to similar homes on the market (both past and present).
But since getting your selling price correct right from the start is so vitally important, you should understand all the best steps to take when deciding on price.
Research Local Sales Data
Before setting a price for your home, take the time necessary to study your local market.
The good news is that teaming up with a local real estate agent makes this step easy.
Agents have unlimited access to real-time sales data. This includes:
- original listing prices;
- selling prices;
- price increases and reductions;
- time on marke;
- and much more.
Access to this data helps make the production of a local market assessment relatively trivial.
But remember, while looking at comparative sales and listings gives you a general idea of what buyers are willing pay, it’s not always the full story.
Much of the real estate market data is lagging, meaning it looks backward in time rather than forward. This can give you a distorted view of what the market will be once you list your house, potentially leading to inaccurate pricing.
Consider your Home’s Condition
The condition of your home can have a big impact on its value.
Obviously, if your house is in good condition, with updated appliances and finishes, you can expect to get a higher price for it. But if your house needs a lot of repairs or updating, you may need to adjust the asking price accordingly.
Depending on the market, it can be tempting to set a high price for your home. This is especially true in a seller’s market like we experienced in 2021-22.
But overpricing can be a big mistake.
Remember, buyers are smart and have access to the same information as sellers. An informed buyer will be less likely to make offers on a home that is priced above market value.
Overpricing will almost always result in lengthening the time it takes to sell. And when your house is priced too high, you may land up lowering the price later on.
It’s almost always better to start with a fair and reasonable price, and then be prepared to negotiate once offers come in.
Pro Tip: "When your home or property isn't selling, it's always the price," says local realtor Jeff Kazmierski. "This is precisely how the market tells you when there's a price-value mismatch."
Economics Play a Big RoleThere are several economic data points that can be useful for forward-looking house pricing. Some examples include:
- Gross Domestic Product (GDP) Growth: This is a measure of the overall health of the economy and can provide an indication of the demand for housing.
- Unemployment: A low unemployment rate can indicate strong demand for housing, as people are more likely to have the income to buy a house when they are employed.
- Interest Rates: Low interest rates can make it easier for people to afford to borrow money to buy a house, which can increase demand for housing.
- Inflation Rate: The rate of inflation can impact the purchasing power of buyers and can affect their ability to afford a house.
- Housing Starts and Building Permits: The number of new houses being built can provide an indication of the supply of housing in the market, which can affect prices.
It’s tempting to set your price based only on past sales and other market data. But relying too heavily on what’s happened in the past can hurt your chances of selling.
One forward-looking method is to consider the potential future value of your property.
This can include factors such as:
- Potential appreciation in the value of the property over time.
- Potential for future development or improvements to the property or the area.
- Potential for the property to generate rental income.
The first 14-days on the market is when your house will get the most attention from buyers. If your house isn’t priced correctly from the start, you may not get the response you were hoping for.
Also, keep in mind the seasonality of our local market. In Northern Michigan, there are better times than others to sell your house, and your listing price might be impacted by the time of year.
In such cases, it’s important to be flexible and willing to consider adjusting your price to attract buyers.
Start Right Here
However you decide on the listing price of your home, remember that it’s not an exact science.
Many factors impact the value of your property over time. And some things, like the economy, are out of your control.
This is why it’s important to start with these two important first steps:
Remember, since real estate professionals like us work in your market every single day, we can provide the best insight and advice when pricing your home to sell.