Step 2: List It at the Right Price
Putting a price tag on a home you’re trying to sell is a tricky thing. For one, it’s your home, crammed full of memories, hopes, and dreams—and all that stuff can cloud your thinking and lead you toward the wrong price. There are consequences: Shoot too high, and your home could languish on the market for months and maybe not sell at all. Price it too low and you could bilk yourself out of a whole lot of dough.
Repeat after us: What you paid doesn’t matter
You may have a dollar figure in mind—perhaps based on what you paid originally, plus a little extra. Because homes appreciate, right? Maybe yes, maybe no. While a hefty increase in value is nice in theory—and in general, it’s expected to be a seller's market this year. “But, the truth is that a house is only worth what the market will pay and sometimes that’s not what the owners were thinking,” states Steve Miller of the Nashville Home Guys.
Think of it this way: Would you buy a banana for $1 if those same bananas were on sale down the block for 69 cents? Of course not! And, of course, a home ain’t no banana.
No matter what you paid for your home, market values fluctuate—both up and down. This can work for you or against you. But all that matters on the open market is what buyers are willing to pay now.
Use all your tools: Comps, AVMs, and your Realtor®
The best way to get a handle on your home’s sales price are the prices of similarly sized homes in your neighborhood—otherwise known as “comparables,” or “comps.” For example, if a house near yours with the same square footage and numbers of bedrooms and bathrooms, and in similar condition, sold for $230,000 within the past three months, you can bet your own price will be in that ballpark.
For a quick snapshot of the value of your home click on the Sellers section and put in your address and the recent sales of homes in your area will come up. If you would like to stay up to date on a monthly basis click on the Home Sellers Report and sign up for this great free service from the Nashville Home Guys.
“While these are great for quick looks at value, it is still only a snap shot. It’s only when a Realtor can lay their eyes on it and give you their opinion based on the individual characteristics your home has to offer and the overall values of the area,” Miller says. That’s why you need your Realtor to visit your home, so they can factor in your home’s unique strengths and weaknesses along with comps to come to a better estimate.
Factor in upgrades with a grain (or two) of salt
Yep, you poured $10,000 into your brand-new chef’s kitchen, or $15,000 to install an in-ground swimming pool. Sweet! So it stands to reason that you’d make that money back when you sell, right? Well, not quite. Surveys by the National Association of Realtors® show that your return on investment for home improvements depends on what kind of renovation you’ve pulled off—and how much prospective buyers want it in your area. Refinishing hardwood floors, for instance, will reap a 100% return, paying for itself. Convert a basement to a living area, and you’ll recoup only 69% of those costs. The harsh truth: Not everyone is going to fall head over heels with your five-seat built-in hot tub. So do your research and find out what those upgrades will really get you.
Leave some wiggle room
Most buyers love to negotiate when you’re trying to sell your house. So it helps when pricing your home to leave some wiggle room to allow a chance to “for the buyer to win one,” Steve says. Instead of starting out with the absolute lowest price you can afford to go, add a bit of a cushion. How much? “A good rule of thumb is to round off in $5,000 increments if you want $346,000 for your home list it a $350,000.” Steve goes on to say, “This creates a win-win situation for you and the buyer and a smoother transaction will be the result."
Also keep in mind that many first-time buyers may have a hard time coming up with cash for closing in addition to their down payment, even if their finances are good and they’re qualified for a loan. Offering to cover closing costs—while sticking to a higher asking price—might help seal the deal.
Price with Internet browsing in mind
Once you find yourself a ballpark price you’re happy with, it’s time to fine-tune it. Keep shoppers’ online search parameters firmly in mind—small differences in your price can spell a big difference in your exposure.
“Home buyers will for the most part set their Internet search parameters with a minimum price and maximum price if you are outside this range your house will not be seen. Miller goes on to offer, "So if you’re thinking about pricing your house at $300,000 you might want to put it at $299,999 so you don’t lose anybody over a search set-up that was a dollar short of being seen by potential buyers." So if you’re on the cusp, consider rounding down to capture more eyeballs. Remember what we said about padding? It cuts both ways.
Test the waters with a soft rolloutWhile choosing a price can be scary, consider this one small loophole: Some brokerages offer a “soft” rollout plan in which they highlight the house as “coming soon” online, without officially listing the house in a multiple listing service. That buys you time to test the market, see if people will click at that price—then adjust accordingly without having to officially lower or raise your price on the record.