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How to price your home right

By Trulia | Published: Oct 14, 2009 | 42 Comments

Why didn't your neighbor's home sell? The home is in a good location with a corner lot and a large landscaped yard, plus it's a newer home with all of the plush amenities a buyer could want like an open floor plan, spacious bedrooms, and high grade cabinets and appliances. So why wouldn't at least one buyer want to buy the place?

There is a one word answer: price. Homes that don't sell are more than likely overpriced. The market isn't rejecting the home so much as it's rejecting the price of the home, and in today's ultra competitive real estate market buyers will only purchase a home that offers them the best value for every dollar spent.

So if you don't want to follow in your neighbor's footsteps how can you pick the "right" price, one that provides you with top dollar but doesn't send potential buyers running into the arms of your competition? Let's look at some quick tips to help you set the right price for your home:

  1. Look at the comparables

    Identify homes that have sold in your market area over the last few months that bear some resemblance to your home. This is called researching the comparables. Next, take an objective look at each listing and ask yourself based on what has sold recently what you should expect to receive for your home. By the way, this is exactly the same approach that appraisers will use to determine market value should your home sell to a buyer who requires a new loan. (It's highly likely as 93% of buyers will finance at least part of their purchase)

  2. Look at the trend line

    Where is your market heading? Is it going up, down, or sideways? By understanding the market's trend line you can price your home ahead of the curve instead of chasing the market. For instance, a seller who overprices his home in an area of declining prices is actually more overpriced everyday he remains on the market, while a seller using a more aggressive pricing structure may seem to be selling too cheaply today but may look like a genius in six months. Visit Trulia's Stats & Trends to check out the current trend in your area.

  3. Look at the days on market

    If you only have a limited amount of time to sell, it may be wise to closely study the average days on market. This number is the average length of time it takes a home to sell from start to finish in your current market. For instance, if on average it takes 90 days to sell in your neighborhood but you need to sell in 30 days - guess what? You may need to adjust your price downward to attract a buyer more quickly.

  4. Get opinions

    One way to help determine a price for your home is to ask for a competitive market analysis (CMA) from a local agent. Typically a free service, these reports will detail market statistics, active and sold comparables, and often include adjustments for unique items that your home may offer. But, because an agent has vested interest in building a relationship with you, it may be difficult for them to tell you a realistic price so be sure to give them permission to be brutally honest.

  5. Avoid the traps

    Many sellers fall into some classic pricing traps that can easily be avoided. One is assuming that the tax value of a home is an accurate pricing gauge. This is a bad idea as many taxing authorities use computer models that have not yet accounted for the steep price declines experienced in most areas of the country. Another trap is assuming that the insurance replacement cost is a good indicator of value. Nope - the replacement value is an estimate of what it would cost to rebuild the home, not what the home is worth today. The last trap is assuming that your home is always superior to the comparables. This is not likely - your home has pluses and minuses like all the homes that have sold in the marketplace.

So how will you know if you get the price right?

If you have a steady stream of buyers pouring through the front door every week, odds are you have done a good job with placing a fair market value on your home. On the other hand if all you hear outside your home is the unnerving sound of silence, you may need to make a quick pricing adjustment. Sure many home owners make the "I don't have to sell" speech in the mirror every morning, but the fact is if they have a for sale sign in their front lawn they do want to sell, and the best way to ensure a successful sale is to set a realistic price relative to the market conditions.

Comments

By Nick Alameddin,  Thu Dec 24 2009, 16:24
Having an agent that's knowledgeable & experienced can save you time and bring more money to the table. She will do the homework for you and can let you know what the home can sell for. Keep in mind if you price your home to high it will sit on the market too long and people may not be interested in looking at it.
By Mike Linkenauger,  Wed Jan 13 2010, 17:28
Definately should get a couple professional opinions. Automated valuation services are notoriously WRONG. Another extremely important factor to consider is "sellers motives" in appraising. In other words, there is a dramatic difference in prices of tradition sales VS. distressed sales like foreclosures and short sales.

Talk to a couple good agents!

Mike Linkenauger
Short Sale Specialist Network
http://www.short-sale-specialists.com
By Jerry Cecil PLLC,  Wed Feb 24 2010, 12:56
Pricing is the number one strategy to get your home noticed. The only way to get your home priced right is to hire a professional. Real estate agents are specifically trained to provide a market price for a given property. When looking for an agent, interview a few Realtors ask for their opinion on price. Make a wise decision when you choose an agent.
By Luis Adrian Segura,  Tue Mar 2 2010, 14:03
Great article Trulia, I specialize in marketing your home not
determining the price, that's the buyers/markerts job.

http://www.RealtorSegura.com
By Stephen FitzMaurice, Realtor,  Fri Mar 26 2010, 15:49
It shouldn't be hard for a local agent to give you an accurate price! An accurate price is the number one factor in selling your home, something the agent would want! A good agent will always be brutally honest.
By Juliette Bouchard- REALTOR,  Tue Apr 13 2010, 11:10
I agree with the Price, Price ,Price. becauseIt is very important to price your property at competitive market value at the signing of the listing agreement. Historically, your first offer is usually your best offer. The value of your property is determined by what a BUYER is willing to pay, a SELLER is willing to accept and what an APPRAISER is willing to allow in today’s market. Buyers and appraisers make their pricing decision based on comparing your property to other property SOLD in your area. BUYERS DON’T CARE…what you paid for it, what you need, what you want, or the cost to rebuild today..
By Elizabeth Russell,  Thu Apr 15 2010, 10:40
I live in an area where comparables wildly differ in price--by about $100,000!
It is an historic neighborhood in Birmingham, AL and each street varies in desirability, how the houses are maintained and sizes of properties. I have priced my home in the middle range of these two extremes--but only been on the market a couple of weeks. I have had 3 potential buyers come through with no offers as of yet.
Any opinion?
By www.AtlantaMyHome.com,  Sat Apr 17 2010, 20:53
I agree with pricing, pricing is very inportant in todays market
By Maria T.,  Thu May 13 2010, 09:28
Price is the number one reason, I will sugest to agents before price a property, have a professional stager to walk the property for advice about how to improve the home, with all the info they can use pricing in a most beneficial way for everyone.
By Cyndi Bell,  Thu Aug 5 2010, 14:37
Pricing your home right is one of the most important things a seller can do in order to successfully sell their home. In a complicated market, like we are in today, sellers need to work with a professional realtor that understands the local market. The hardest thing for sellers to come to terms with is, it’s not what they need to sell their home for; it’s what the buyers are willing to pay for it.
The market decides the price. Find at least 5 sales in the last 6 months that are comps. If that is not available, you may want to get an appraisal as a second oppinion. I have been using pre-appraised as a marketing tool and it works. Not only do you have your Realtors oppionion but you also have it from the appraisor who is going to be doing it anyways for the buyer's lender. It's a great tool for demanding your target sales price.
By Cristen Gregory,  Fri Nov 5 2010, 11:11
The agent should always suggest to their seller to have an appraisal done before listing the property; it takes the emotion out of the sale. Someone who has lived in a home for a long time often looks at it with sentimental eyes, making it more difficult for them to see it from the market perspective. A home inspection also gives the seller an idea of what may need to be done should they choose to repair, or what they are choosing not to do, therefore passing the responsiblity over to the purchaser.
By Shawn Rosa,  Tue Dec 13 2011, 10:29
listen to your realtor instead of thinking you know more than the professionals
By Kathy Hines 972-632-6530,  Wed Jan 4 2012, 22:46
Be careful to price competitively, if the price is too high upon first launch, You the seller, have missed the biggest audience,especially when it comes to that first web launch. A Realtor can assist you in understanding prices for the area. Ultimately, you the seller make the final say. Pricing with the market can help sell. Pricing against the market can help you to keep your house a lot longer.
By Elena Talis,  Sat Apr 7 2012, 10:03
Some people say realtors don't sell homes, prices sell homes. Pricing is as much art as it is science. One thing that may help is to ask your agent to host a "pricing party" and invite other agents to solicit their opinion. Ask for the results in writing.
By mattw922,  Wed Apr 11 2012, 08:09
I noticed that almost everyone on here saying you need a professional's opinion on the price is also a realtor. Think there's any bias there? Get an experienced appraiser to do it. They won't try to get 6% of your selling price and ask him what he thinks the appraisal vs. market price is. They're generally happy to talk about something they're really good at so don't be afraid to get their opinion.
By Stephanie Leon PA 786-574-3928,  Sat Apr 28 2012, 10:25
Today's market is a complicated market and it is very much advised to have your property assessed my a professional. You can have an agent do this and it is FREE or you can pay about $450.00 to an appraiser. The choice is up to you as the Seller. Just know one thing an overpriced home will last days on the market and a Fair priced home will bring you offers. You must not be greedy in this market or it will never sell.
By Sweet Seminole Sassy,  Tue Jun 12 2012, 04:54
one week the price of the house was higher so we raised the price the following month it keeps on going down. I just can not give the house away when I put in 30,000.00 in up dates. I do not want to sell it for the price we paid for it, 30 yrs ago, but I do not want to let it get away to a low baller pricer.

I think a fair amount to sell it would be 170,000 for the time and effort we put into this house. Other homes their kitchens were not updated and all that brown mixed with white cabinets were old and the houses smelled inside.
My house was taken care of with love and respect, and we did alot of updates, so my investment along with my brother costs us alot of money and we want to recoop what we put into this house. I surely do not want to give it away would you want to give your house away when you spent half of what the house is worth?
By Matie,  Tue Jun 26 2012, 05:09
The value of your property is determined by what a BUYER is willing to pay, a SELLER is willing to accept and what an APPRAISER is willing to allow in today’s market. Buyers and appraisers make their pricing decision based on comparing your property to other property SOLD in your area. BUYERS DON’T CARE…what you paid for it, what you need, what you want, or the cost to rebuild today..

http://www.indexpost.com/
By Laci Pemberton,  Mon Jul 30 2012, 19:52
Absorb all the data you can and view against area comps.
By dawn_yank2001,  Mon Aug 27 2012, 20:28
Why is it that the seller has to make all the sacrifices and virtually give a way his house, while the realtor, God forbid he should lower his commission, say from 6% to 3%??!!
By dawn_yank2001,  Mon Aug 27 2012, 20:28
By dawn_yank2001, Mon Aug 27 2012, 20:28
Why is it that the seller has to make all the sacrifices and virtually give a way his house, while the realtor, God forbid he should lower his commission, say from 6% to 3%??!!
By Elizabeth Sagarminaga,  Fri Sep 28 2012, 04:58
Hi,
Great post. Thank you for posting this information about the pricing factor for the homes. Price is the prime consideration for every home.Pricing your home correctly is very home before you go for selling.


Thank you once again..:)
By Felicia Reynolds,  Fri Sep 28 2012, 06:11
Matie makes a great point -- Buyers don't care about the things that mean all the world to you as the seller. I have heard sellers say that they needed to price their house at a certain number because "It's our mother's only retirement asset", or "We need to make XXX to have a big enough down payment for our next house" or the ever-popular "We paid XXX for it and we want to get that back". None of this is worth anything to buyers. You need to price your house in a way that you can back up with hard, cold facts and numbers.
By opondomusa,  Fri Nov 2 2012, 08:05
How much is too much when it comes to your asking price? That is the most challenging question for home sellers.

Thanks for the tips.More on this check below:

http://www.realtypin.com/news/story/632-4-tips-for-setting-the-perfect-asking-price
By Debbie Starnes, Realtor,  Fri Mar 8 2013, 05:55
I always recommend the seller get an appraisal if they feel the listing price I suggest, based on comps in the area, is too low (its always about being too low, never too high). If the seller is not realistic about pricing their home, I walk away from the listing. I can't afford to waste their time or mine.
By Dale Snyder,  Sat Mar 16 2013, 04:28
Good article, but not as relevant to the Las Vegas market anymore and would assume in most markets with very low inventory. Right now we are able to push prices far above the compatibles and appraisals...
By Christina Murphy Mazgelis,  Wed Oct 23 2013, 10:06
This article has some great info. What I have so often found is that inexperienced or new agents will often take a listing at an unreasonably high price. What happens is the owner wants to believe that their home is worth more than it really is. Understandably so, we all want to be in the positive side of finances. However, the reality is, if your home is not priced at precisely what your current market is telling you, then it will sit, get stale and forgotten. If you listen to a Realtor that has years of experience they will tell you what is really going on. I myself have walked away from several potential listing because the owners wanted far more than they could possibly get. Often times they have called me 3 or 5 months later to say they should have listened to me. At that point they were out even more money due to the monthly fees of Mortgage, utilities, taxes, maintenance, ect...and often lost out on a good value and interest rate of the home they wanted to buy. I am a Realtor on Cape Cod, Ma. Feel free to contact me with any questions.
By Terri Hunt,  Mon Nov 18 2013, 10:14
Great article. Must stress the concept of pricing a home correctly from the beginning!
By Kevin Richey,  Wed Dec 25 2013, 09:21
I agree that pricing is one of the most important pieces of selling a home. If a person is able to sell their home for a higher price than it may be worth, the sale might not finalize. If a person agrees to pay $300,000 for a home that only appraises for $275,000 the buyer will have to come up with the difference of the appraised price and sold price. Most buyers are not able to make up the difference.
By Marta Keller,  Sun Jan 26 2014, 07:56
We had two agents come to meet us and one never mentioned short selling our house and just recommended a price (well above short selling price) and the other said she doesn't think we can break even. I'm so confused.
By Carmen.sandiego27,  Tue Jan 28 2014, 09:52
Selling a house can be such a hassle. My husband and I just recently sold our home and we couldn't of done it without the help of selling a house portland. They were so good to us, answering all our questions and helping us along the way.
By thiagodaluz7,  Mon May 5 2014, 07:29
Excellent article! This really gave us a lot more confidence as we prepared to price and sell our home. We've enjoyed working with agents, but we like having some independence. These tips definitely gave us more! Thiago | http://www.rubynw.com/sell-now
By Gary Papirov,  Mon Jun 16 2014, 09:14
Some real estate agents joke that there are two types of home sellers: Those who want more money than their house can fetch, and those who refuse to back off that position.The vast majority of agents will be upfront and honest while trying to instill a sense of reality in their potential client while others, the vast minority, may take the listing at the higher price to the detriment of the client.
By Jim Cramer,  Wed Jul 2 2014, 08:05
In our Market what we are seeing is if a home is not priced right it is just going to sit there. A property needs to be priced right from the start, be in good condition and in an acceptable location from what we have been experiencing during the last 6 months.
By Jim Cramer,  Sun Jul 13 2014, 13:16
Thanks for some great information here. I just Tweeted about it!
By reynoldsc99,  Wed Jul 16 2014, 15:00
This is great. I think finding the perfect price for the home can be really difficult. These are great tips, but I know I still don't have enough experience to accurately price my home. I'll be talking to a realtor about what I can expect to get my home for.

Claire Reynolds || http://www.rubynw.com/sell-now
By Eugene Dean,  Mon Jul 28 2014, 15:20
I am trying to list my home but am unsure of where I should set my asking price. I took your advice and looked for comparable homes that have sold recently. I was relieved to see that most of the homes sold for around what I want to get. Should I set the price a little higher to allow room for negotiation?

http://www.perezandaxt.com
By dolores.brown999,  Thu Jul 31 2014, 10:05
I think it's good to know how to price your house. It's sometimes hard to know the worth, because the time lapse from when it was built plus the current market. It's good to have advice like this to make it simpler. http://www.cashclosing.com/
By reynoldsc99,  Thu Jul 31 2014, 13:40
Having a good realtor is very important. A realtor can look at your home and tell you what it is worth. They will go find buyers who are willing to pay close to the asking price. Even though you pay for a realtor, you should be able to get your home for more because a good realtor can make all the difference in pricing.

Claire Reynolds || http://www.melissaslistings.com/aboutus.php
By hickoryposcery,  Wed Aug 6 2014, 08:22
My neighbor was trying to sell their house and it was on the market for almost a year and a half. They finally took it off the market realizing it wouldn't sell. Do you think they spent more money trying to sell their house than if they had just tried to remodel?

http://www.appraisalofficeaspen.com
By Karen Haug,  Sat Aug 9 2014, 18:09
Listing your home for the right price is a challenge. Buyers are looking for the bargains and sellers are trying to hold on to as much as their equity as they can. Balancing all this out, every home sale is different and unique. So, if you would like to get the most money you can out of your home, curb appeal will keep the buyers coming, cleanliness peaks their interest and staging is most important. If you have an older home, modernization is important to most buyers.

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