by Larry Alton
Your home’s asking price has a significant impact on the final price of your home, not to mention the speed at which you’re able to sell it. The asking price will often help form potential buyers’ first impressions, filtering out buyers from different budget ranges, and possibly affecting how they see the home. From there, it will serve as the basis for price negotiations, and ultimately influence the final sale price of your home.
With so much on the line, how should you approach setting your home’s asking price?
4 Tips to Set a Profitable Yet Competitive Home Asking Price
1. Work with a professional.
First, unless you’ve had years of experience pricing and selling homes, make sure you work with a professional. Seasoned real estate agents will have sold hundreds, if not thousands of homes, and that experience allows them to set better prices. As a seller, you’ll be responsible for paying a few percentage points of the final sale of your home, but keep this in mind: Your selling agent will likely help you sell the house for a higher price, in excess of what their commission is. Ultimately, you’ll still end up ahead of the game.
Talk to your real estate agent about your goals, and they’ll work with you to set the best entry price. They’ll also be there to talk strategy as you enter negotiations.
2. Get a fair appraisal.
It may also be a good idea to get your home formally appraised. This is usually a step taken by lenders once a buyer has made an offer on the home to ensure that the offer is reasonable for the property. However, being proactive and getting the appraisal yourself can help you be confident that you’re working with the right price range in mind. A professional will be able to concretely estimate how several variables affect the price of your home and give you a fair market value to serve as your anchor.
Just keep in mind that this appraisal isn’t a guarantee that your home will sell for a given price. You’ll also need to consider the state of the market, including the number of houses up for sale in your area and the number of buyers interested in those properties.
3. Understand your goals.
When working with your agent and brainstorming a price, your most important consideration should be your primary goal in selling your house.
For example, if you’re trying to sell your house for the highest price possible to maximize your profit, you’ll need to set your asking price higher. This will start negotiations higher and will probably lead to a higher-priced sale, but it may also take you longer to find a willing buyer.
Conversely, if you’re trying to sell your home as quickly as possible, you’ll want to set the asking price a little lower, so you can motivate buyers to act quickly. Obviously, you won’t want to set the price too low, or you’ll end up losing money.
Most home sellers will want to strike a balance, selling the home for enough money to secure them their next home purchase, but also selling the home quickly enough that they can move out in a reasonable timeframe.
4. Keep the future in mind.
When pricing your home, you’ll also want to consider the potential effects your initial asking price could have on buyer perceptions. For example, let’s say you price your home above its appraisal value. In general, this will lengthen the amount of time it takes to sell your home, but will ultimately help you fetch a higher price. However, you’re seeing little to no buyer activity, and your home doesn’t sell for weeks.
If a home is left on the market for too long, it could be seen as a red flag for potential buyers, especially if it’s accompanied by a series of price drops. It might be better to set a lower price initially so you don’t have to deal with that eventuality.
The best asking price is one formulated with sufficient research, consideration, and professional advice to create it. Spend the time on this crucial variable in your home’s sale—you’ll be glad you did.
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