3 Things to Know About Pricing Your Home
Pricing your home for sale
How does a real estate agent set my home asking price? How does the best real estate agent in your neighborhood create a sales price? It’s not magic, but there’s a lot of experience and art involved in the process. A good place to start is to consider the idea that there is no single list price. Different brokers, with different perspectives, may well suggest different values. The important issue for property owners is to understand why a broker suggests a particular price.
- Real estate agents compare your home to recently sold homes nearby
- Agents will also consider the competition currently on the market
- Different agents may come up with different prices
There are several goals that reputable brokers try to meet with a listing price. They want the home to sell quickly. A property that languishes on the market tends to lose value. And no one earns a commission on a home that does not sell. They don’t want to underprice the property. That would hurt the seller’s interests.
Brokers don’t want to overprice the property, because that will drive away potential buyers and cause the property to stagnate. Sometimes owners want a higher value because they see the list price as a reflection of their importance. As a result, setting a sales price involves an understanding of more than bricks and mortar.
Homes reflect who we are, and have much to do with ego, status, pride, image, and a lot of subjective qualities. For such reasons, the seller may want a certain price for the property. It’s not that the property is worth the seller’s value, but that a neighbor or competitor got that price.
When valuing a property, a broker will make pricing adjustments. As an example, you may have a 2,100 sq. ft. property but one comparable property may have 2,300 sq. ft. You may have 2.5 bathrooms, while a “comp” has three. Etc.
The price has to be right not only in the sense of attracting purchasers but also as the sale progresses. For instance, lenders will finance a property on the basis of the sale price or the appraised value, whichever is less. A sale price that is too high can lead to problems. It may require the buyer to come up with more cash or the seller to accept a reduction.