Selling Your Home: How To Choose A List Price

Dated: December 18 2019

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Are you thinking about selling your home? To be successful, choosing the right list price is very important. 

Your real estate agent is your biggest asset when it comes to pricing your home competitively. They will work with you to pick the right price in today's market so that you sell your home promptly at the best price.

Finding that balance of a competitively priced home that leads to a quick sale can be tricky. An overpriced home will lose attraction in just a few short weeks. You stand the chance of driving away potential buyers by merely overpricing your home. On the flip side, a home priced too low could backfire as well if the supply and demand aren't in your favor. You've seen bidding wars drive up the price of a home, but you should never count on that. 

Before settling on an asking price, your agent will do a lot of background work, including pulling recent comps of homes sold in your area and preparing a comparative market analysis. They will look at the sales activity of homes similar in size and age over the past three months within a half-mile or so of your home. 

You'll learn so much by reviewing original listing prices of homes and final selling prices, as well as the number of days on the market. Of course, the results always depend on if it's a seller's or buyer's market. The final selling price of a home isn't known until the transactions close. Still, your agent can and should contact the listing agent for price clarification. Some agents will share that information, and others may not.

It's always a good idea to get firsthand knowledge of your competition. You and your agent can tour homes currently on the market in your neighborhood. This is also a great time to take note of what you did and did not like about the homes you visited. When buying and selling a home, first impressions are often lasting impressions. As you prepare your house for selling, mimic what you liked about the houses you toured, and don't replicate any experiences that left you feeling less than impressed. Remember, these neighboring homes for sale are your competition. 

After your agent has collected all available data, they will compare it to the current market conditions. For example, in a buyer's market, let's say the most recent comparables in your area are $275,000. Your agent will recommend that your sales price have some wiggle room for negotiation, but you'll want to be strong enough and close enough to the last comparable sale to entice a buyer to tour your home. You might need to price your home at $274,900 and settle for $270,000.

In a seller's market, you might want to add 10% more to the last comparable. You can ask more than the last comparable sale, and you'll likely get it if there is little inventory and many buyers. That $275,000 home might sell for $285,000 or more.

When the market is neutral, your agent will recommend setting your price at the last comparable sale then adjust it for the market trend. 

While it's true that you can list your home at any price, remember that the buyer's lender will order an appraisal after an offer has been made. The appraiser will be comparing homes of similar age and size in your area. Inevitably, the final listing price is up to you. But knowing you and your agent have done your due diligence will allow you peace of mind to price your home competitively.


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