Establishing an Appropriate Price Range for Your Home
By Ted Ricasa
In certain types of negotiations, the old adage "It doesn't hurt to ask" rings true. You want a 10 percent bump in your annual salary? Ask for 15 and see what happens. You might get it, right? It doesn't hurt to ask - right?
When it comes to selling your home, however, it may hurt to ask for more than your home is realistically worth. Especially if you are intending to sell your home quickly, pricing your home at or above its market value can scare potential buyers off, leaving you with a property that won't budge and mounting expenses as you leave it on the market.
On the other hand, if you are flexible in your pricing, you may attract interest from buyers who might otherwise have considered themselves out of your "wildest dream" sell price. You may even find your house the subject of a bidding war.
In fact, many homeowners have experienced exactly that scenario when adopting the value range home-selling strategy. The strategy, which entails listing the low and high price points the homeowner is willing to consider for the home, has become increasingly popular in recent years and, if executed properly, can shorten the amount of time a property lingers on the market.
First, Find Out What Your Home Is Worth
Before you can establish price points, you must have some idea of what your home is worth. This means that you will have to solicit some objective viewpoints and consult some impartial data. Sentimentality can cloud a seller's judgment, while a tendency to view one's own home as "special" compared to others in the area has left too many homeowners in the lurch.
A good starting point for discovering what your home is worth in the real-world current marketplace is to analyze your local market. Attend some open-house showings near you and gauge how much the homes that are comparable to yours are selling for. Pick up a copy of your local Sunday newspaper and read the real estate listings. Invite constructive criticism of your home from anyone willing to give it.
After you've done a bit of homework, start talking to professionals. Don't be sweet-talked into hiring the real estate agent who gives you the highest estimate of your home's worth. Rather, make prospective agents prove to you that they have done their homework and know what the local market will actually bear. Ask for a comparative analysis of the market with comps - the prices that local homes have recently sold for, as opposed to the asking price.
Don't talk to only one agent, even if he or she impresses you straight off the bat. The more professionals you talk to, the better idea you will have of what your low and high price points should be.
Think Realistically in Setting Your Price Points
By now, you have established your priorities for selling your home. You have an idea of how quickly you want to sell it and whether you wish to hire a real estate agent or go down a different route. Perhaps you've cleaned it up and feel confident that it's ready to put on the market. In establishing your price points, you want to think in terms of how you can best meet the personal goals you have laid out for yourself, but you also want to think in terms of the realities you have discovered in figuring out the value of your home.
With all of this in mind, remember that, even if you are patient and want to wait for at least an uptick in your local housing market, there is no guarantee that "the right time" will ever come. If you want to sell your house in a reasonably timely manner, you want to generate as much interest as possible. Yes, you want to establish a price range with which you feel comfortable, but you risk wasting significant time and money if you establish a price range with which most potential buyers aren't comfortable.
Setting the High and Low Ends of Your Value Range
The best way to get the attention of buyers is to distinguish your home from other comparable homes on the market. If the average home in your neighborhood is listing for $137,000 and home prices are dropping, on average, 1 percent each year, think about setting the high end of your price range at 3 percent below the average, or approximately $133,000. You won't be taking a bath if you sell it for that price, and there's always the chance that by capturing the attention of more buyers, the counterbidding process might even push the final sale price closer to the market average.
In setting the low end of your price range, think in terms of $25,000 chunks. Buyers tend to set their ranges in such chunks (e.g., $225,000-$250,000), so it makes good sense to use that as a range as a seller, as well. Using the scenario in the above paragraph, the price range for your home would be $108,000 to $133,000.
Keep in mind, of course, that setting a range does not obligate you to accept offers that come in toward the low end. But with that particular range, you have a chance to attract the attention of buyers who are searching in the $100,000 to $125,000 range, while also commanding the attention of those searching in the $125,000 to $150,000 range. By not setting an exact price, you encourage more offers, and more offers means more counteroffers. You stand a far better chance of initiating negotiations that will end favorably for you than if you had simply priced the house at $137,000 - or higher - to begin with.
Don't Dismiss Low Offers Out of Hand
The buyers who are interested in your house are looking for a good deal, and in establishing your value range strategically, you have created the impression of a good deal. With this in mind, don't immediately dismiss offers that you aren't thrilled with. You may find buyers who make offers at or even below the low end of your range. This isn't necessarily their best offer, however, and it doesn't necessarily reflect the actual interest they have in your home. Because you have provided a range, buyers know that you are flexible, which is why some may try to low-ball you. There's a good chance that many of these buyers are equally flexible and, if they are genuinely interested in your home, may eventually increase their offers substantially.
The key here is not to take negotiations personally. Low offers are not insults, nor are they commentaries on your home. Take them for what they most likely are - starting points for negotiation - and you'll stand a much better chance of selling your home for a price that you find acceptable.
If at First You Don't Succeed, Rethink Your Value Range
Ultimately, the market will tell you how successful you were at establishing a value range for your house. If, during the first month it is on the market, a few potential buyers look at your home but fail to make offers, you know that your range probably needs to come down a little. If no one bothers even to look at your home, your range probably needs to come down significantly. Don't hesitate to respond to what the market is telling you. Stubbornness may be a virtue in some situations, but it rarely sells houses.
If you have any questions about setting price points for your home, or you would like to know how much you could receive for your house right now in cash, please contact the real estate experts of Fast Home Help today.