By:
Jamie
Wiebe - www.houselogic. com
4 things canny home sellers do when pricing their homes.
Home pricing is more of a science
than an art, but many homeowners price with their heartstrings instead of cold,
hard data.
Smart sellers know that crunching
the numbers is always the better route to an accurate home price. Here’s how
they do it.
Homeowners often think that it’s OK
to overprice at first, because — who knows? — maybe you’ll just get what you’re
asking for. Although you can certainly lower an inflated price later, you’ll
sacrifice a lot in the process.
Just ask Candace Talmadge. She
originally listed her Lancaster, Texas, home for $129,000, but “eventually had
to accept the market reality” and chop $4,000 off the price.
The home’s location proved
challenging: Buyers were either turned off by the area — a lower-income
neighborhood south of Dallas — or unable to afford the home.
“Sellers have to keep in mind the
location,” says Talmadge. “Who are going to be the likely buyers?”
The most obvious pitfall: A house
that remains on the market for months can prevent you from moving into your
dream home. Already purchased that next home? You might saddle yourself with
two mortgages.
“You lose a lot of time and money if
you don’t price it right,” says Norma Newgent, an agent with Area Pro Realty in
Tampa, Fla.
And worse: Continually lowering the
price could turn off potential buyers who might start wondering just what is
wrong with your home.
“Buyers are smart and educated,”
says Lisa Hjorten of Marketplace Sotheby’s International Realty in Redmond,
Wash. “You’re probably going to lose them.”
It’s easy for homeowners to stumble
into two common traps:
- Conflating actual value with sentimental value — how much they assume their home’s worth because they lived there and loved the time they spent there.
- Assuming renovations should result in a dollar-for-dollar increase in the selling price — or more.
“Many homeowners think, ‘Of course my
home is worth a bazillion dollars,’” says Newgent. If they put in a few
thousand dollars worth of new flooring, for example, they might overestimate
the upgrade’s impact on the home’s value into the tens of thousands.
Talmadge’s Texas home came with a
built-in renovation trap: It was already the nicest home in the area, making it
harder to sell. Major additions had inflated the square footage — and the
price, according to one appraiser — without accounting for the surrounding
neighborhood. That created a disconnect for buyers: Wealthier ones who might be
interested in the upgraded home disliked the neighborhood, and less affluent
buyers couldn’t afford the asking price.
“Don’t buy the nicest home on the
block” is common real estate advice for this reason.
That’s not to say that renovations
aren’t worth it. You want to enjoy your home while you’re in it, right? Smart
renovations make your home more comfortable and functional but should typically
reflect the neighborhood. A REALTOR® can help you understand what certain
upgrades can recoup when you sell and which appeal to buyers.
Another culprit for many a mispriced
home is online tools, like Zillow’s “Zestimate,” that prescribe an estimated
market value based on local data.
The estimate is often wildly
inaccurate. A Virginia-area real estate company, McEnearney & Associates,
has compared actual sold prices with predicted online estimates for several
hundred homes in the area for the past few years and concluded the predictions
failed half of the time.
The best pricing strategy? Consult a
real estate agent, who will use something called comps (also known as
“comparable sales”) to determine the appropriate listing price. They’re not
just looking at your neighbors; they’re seeking out near-identical homes with
similar floor plans, square footage, and amenities that sold in the last few
months.
Once they’ve assembled a list of
similar homes (and the real prices buyers paid), they can make an accurate
estimate of what you can expect to receive for your home. If a three-bedroom
bungalow with granite countertops and a walk-out basement down the block sold
for $359,000, expecting more from your own three-bedroom
bungalow with granite countertops and a walk-out basement is a pipe dream.
After crunching the data, they’ll
work with you to determine a fair price that’ll entice buyers. The number might
be less than you hope and expect, but listing your home correctly — not
idealistically — is a sure way to avoid the aches and pains of a long,
drawn-out listing that just won’t sell.
Once your home is on the market,
you’ll start accumulating another set of data that will serve as the ultimate
price test: how buyers react.
Agent Hjorten says there’s an easy
way to tell if you’ve priced too high: “If we have no showings, it’s way too
high. Lots of showings and no offer means you’ve marketed well — but it’s
overpriced once people get inside.”
Talmadge didn’t struggle with
showings. She says a number of people were interested in the home, but not
enough at the price. In the end, Talmadge sold her home for $125,000, with a
$5,000 seller’s assist, a discount on the cost of the home applied directly to
closing costs.
“It all boils down to location,
location, location. In [another] neighborhood, our house might well have sold
for well over $130,000,” Talmadge says.
When it comes to finding a buyer,
pricing your home according to data — and the right data, at that — is crucial
to making the sale.
Give
Jinks Realty a Call (956) 429-3232 or Visit our Website www.JinksRealty.com for all Your Real
Estate Needs.
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