As a seller, how you first price your home is more important than you might think. Setting a competitive, fair, and reasonable price point for your listing is a delicate process. Sellers need to be informed on their current local market as well as what their home is truly worth.
Since a home sale is a multi-step process, sellers who set incorrect selling prices in the beginning of their sale are inviting issues down the line. Whether it is a sudden change in price after the inspection and appraisal, or a buyer who cannot actually afford your home come closing, many issues related to inaccurate pricing can happen throughout the deal.
When You Price Your Home, Price It Right
Sellers can avoid these setbacks by pricing their homes right from the beginning.
The National Association of REALTORS® reported that in 2020, recently sold homes saw a final selling price that was a median of 99% of the final listing price.
Today, the price for homes is quickly on the rise. The median existing-home sales price is currently at $363,300 as of June 2021, marking a 23.4% year-over-year increase. According to NAR’s data, all regions in the United States experienced substantial price gains.
As the value of homes on the market is increasing, sellers need to know what prices to list their homes from the start. Here are five reasons why it’s valuable to accurately price your home the first time you list it.
#1. Attract More Serious Buyers
Increasing the visibility of your listing is a primary motivator for setting the right price for your home.
Buyers typically shop for homes based on price range. By the time that buyers are seriously searching the market, they’ve already been preparing their home buying budgets. They know how much they can afford, thanks to mortgage pre-approval letters and financial diligence.
Having a competitive and fair market value on your home will get it on the radar of promising buyers who can actually afford your home.
#2. Drive Away Weak Leads
Correct pricing on your home will also reduce the instance of weak leads pursuing your listing. Choosing a buyer is a business decision, and sellers always want to opt for the most strategic buyer.
Fundamentally, a strong buyer can afford your home when it comes time to close on the deal. A correctly priced home will best impact its target audience and attract buyers that bring sellers legitimate value.
#3. Pricing Too High or Too Low Are Not In a Seller's Interest
When you price your home, always seek an accurate and reasonable value.
Going higher or lower than the accurate price is not a good strategy for sellers. A home that is priced too high is more likely to drive buyers away and less likely to see a multiple-bid situation. A home that is priced too low could reduce a buyer’s confidence and interest in the listing.
The best option is a price that best reflects the surrounding market and state of the property. When you select a high quality agent, they will complete a thorough comparative market analysis to determine the right price.
#4. Avoid Issues at Inspections and Appraisals
Even if a mispriced home is not problematic at first, issues will begin surfacing when it's time for inspections and appraisals.
The last thing a seller wants is their pending deal to fall through due to a discrepancy related to their price tag. If the inspection and appraisal collectively revise the appropriate market value of your home, there’s a risk that the buyer will pull out of the deal.
#5. Buyers Will Feel Confident About Pursuing Your Home
It’s not just the buyer and their agent that are looking at your listing price. If a buyer is financing their purchase with a mortgage loan, as 87% of buyers did in 2020, their lender will be validating your listing price through an appraisal.
Mortgage brokers never want to lend out more than a home is worth, so they are serious about determining an accurate value for homes they are financing. Since a buyer’s loan is dependent on the home they are trying to purchase, many buyers may be scared away by a lofty price tag.
Setting a fair price can help buyers feel confident in their financial backing and long-term ability to afford your home.
Work with a Top Agent to Price Your Home
Keep these five considerations in mind when it’s time to price your home. If you have questions about how to best price your listing according to your local market, get in touch with a top-performing real estate agent.
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