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If you are planning to put your home on the market — especially if you live in a place where prices are rising and buyers are competing for homes — it can be tempting to list your property at a high price hoping that you’ll actually get it. After all, it can work with cars, why not with homes?
Don’t do it. Resales of homes and automobiles are very different things.
Experienced Realtors who have been through dozens, scores, or even hundreds of transactions, will advise you to price your home appropriately from the outset because it’s pivotal to seeing the home sold quickly and at the best price. Research backs up what experienced Realtors already know: overpricing your home and then lowering the price a few times most often leads to a final sales price significantly below what you originally should have asked for it.
And, to make matters worse, the longer a home remains on the market, the deeper the discount is likely to be off the original price. Ouch!
How to price your home correctly
Many homeowners seek to price their home based on factors like the price they paid for it, the balance that they currently owe, or simply on the profit they need to buy another house or to meet their financial goals. These motivations are perfectly understandable but in reality the value of your home is what the market will bear. Here’s the problem: If a property is overpriced, some potential buyers will avoid looking at it at all (and having no one show up to see it is a pretty clear message from the market). Others may view the home but walk away without making an offer.
So, what can you do? Choose a Realtor who can provide you with the best comparative market analysis (CMA) and who understands your local area intimately. Some agents may attempt to woo you with an inflated price — it probably happens every day somewhere — but in the end the market will speak clearly, and choosing an experienced Realtor who understands the importance of market-driven pricing will end up being a choice you won’t regret.
Your Realtor’s CMA should include sales prices for similar properties nearby that have sold recently, prices for currently listed homes (these will be your competition), and prices of homes that were taken off the market because they didn’t sell. Look for a Realtor with demonstrated experience who can factor in a range of local market issues to produce that all-important first price.
If the price is right from the beginning, it usually means not only a faster sale, it typically means more money in your pocket.