Pricing decisions should be grounded in reality from the start. Here are some tips to consider before you settle on a listing price.
1. Put personal feelings aside. Think realistically about how much a buyer would willingly pay for your home, not what you think they should pay based on your bias. Buyers don’t care what you paid for your home or how much was invested in repairs and upgrades. All they care about is getting the best home at the best price.
2. Understand the concept of market value. The value of your property is determined solely by what a buyer is willing to pay in today’s market. You shouldn’t automatically expect to get more than you paid when you bought the home. You have to look at all of the information including lagging indicators, leading indicators as well as current indicators. Having an agent who can provide a regression pattern helps as well.
3. Know the competition. No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market. Many times buyers will be looking in more than 1 area at a time. Your best guide is a record of what the buying public has been willing to pay in the past few months for properties like yours in your neighborhood.
4. Price it correctly from the begining. If you're too high, you'll need to continually reduce the price until you hit that "magic" number, and by then buyers will begin wondering what is wrong with the house or might wait to see how low you will go. We call that chasing the market.
5. Don’t test the market. Testing the market is a poor idea because most showings occur during the so-called "honeymoon" period, or the first 21 days in which the property is listed. After those first few weeks, showings drop dramatically. If the listing doesn't sell it could be on the market for a very long time. It typically takes 25 showing to get an offer. If you have had 50 with no offers you have in essence lost 2 buyers. Timing is everything!
Pricing and marketing go hand in hand, one does not work without the other.
As always please consult a real estate attorney with any legal questions you may have and your accountant for any tax questions.
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