The list price you choose for your home significantly affects whether
you will profit in the sale, how much you will profit, and how long your
home will sit on the market. Your realtor’s knowledge of the market and
what is selling – or not selling – will be invaluable in helping you
determine the price. The objective is to find a price that the market
will bear without leaving money on the table.
Points to consider:
TIME – Time is not on your side when it comes to real
estate. Although many factors influence the outcome, perhaps time is the
biggest determinant in whether or not you see a profit and how much.
Studies show that the longer a house stays on the market, the less
likely it is to sell for the original asking price. Therefore, if you
goal is to make money, think about a price that will encourage buyer
activity. In other words, price it at fair market value. Chances are
that your home will sell at its fair market value. Pricing it
realistically at the outset simply increases the likelihood for a timely
sale with less inconveniences and greater monetary return.
VALUE VS COST – It is important that you not confuse
value with cost. Value is what a buyer is willing to pay. It is not what
you paid for it, what you need out of it, what you put into it, or what
the neighbor’s home sold for.
COMPETITION – Buyers educate themselves by viewing many
homes. They know what a fair price is by reviewing comps with their
buyer’s agent. If your home is not competitive in value with other homes
they have seen, it will not sell. Buyers typically look at homes within
a $10,000 – $25,000 price range – depending on the price point. If your
home is not priced within the correct range, it is likely that it will
not be exposed to its potential buyers.
REPUTATION – Overpricing causes most homes to remain on
the market too long. Buyers, aware of a long exposure period, are often
hesitant to make an offer because they fear “something is wrong” with
the house. Often homes that are on the market for a long time
eventually sell for less than their fair market value.
CONVENIENCE – Over pricing can prove costly and worrisome, as well as inconvenient.
IF YOU ARE UNWILLING TO LIST YOUR HOME AT THE CURRENT MARKET VALUE, YOU ARE BETTER SERVED NOT PUTTING IT ON THE MARKET AT ALL.