Pricing Your Home in a Buyer's Market
Jim Grapes - June 2, 2008
Your decision to sell
Buying or selling a Spokane home is a major life decision and may bring a stressful period in your life if you're unprepared. Moving is always stressful, you can avoid any unnecessary stress by arming yourself with the best information. It's very important to have the latest sales data and market data to be successful in selling your home. Hire a real estate professional to assist you with pricing strategy, marketing and negotiating.
Dealing with supply and demand
The current market conditions will have a major impact on your pricing strategy. It matters little what you've paid for your property as previous market prices have little bearing on current market prices. What matters more is what price comparable properties are is selling for. Naturally, a lower priced home of similar features will sell before a higher priced one.
Price point and condition
Properties with similar features and material condition should fetch the same amount when marketed in same market conditions. Obviously, you may charge more for a better property than something less desirable. Location, size, and competition all will factor in to current market prices. But, do you have control over these factors? Not really. You do have control over your asking price, the material condition and presentation of your home.
Time on the market
As the Spokane real estate market trends towards a buyer's market, days on market the typical home takes to sell will be higher than in a seller's market. Be honest with yourself about how long you are willing to keep your home on the market. If you're willing to keep your home for sale longer you can wait for a higher price. Lower prices tend to bring quicker acceptable offers. Find out what the average time to sell a home is in your market area for the price range of your home.
If you ask more than the market will bear your house will not sell at all. If you ask too low of a price you'll sell quickly buy may leave money on the table for the buyer. Keep in mind, a home sale must be beneficial to both the buyer and the seller. You cannot force the market to come to you; you can only work within the constraints of current market conditions. Before you list your home for sale, visit open houses in your area. Look at houses that generally match the features of your house. This will provide a price range that will help you set your asking price. Search the Spokane MLS to find comparables.
The staleness factor
However, just being willing to wait doesn't always translate into a higher sales price. Sometimes, starting out with too high an asking price results in a lower sales price in the end. This happens because qualified buyers will see your home usually only from an internet listing and qualify their interest from the first viewing. Later when they see it again they remember the home and they reaffirm their original assessment even if you've lowered the asking price. Many buyer's rationalize their assessment like this, "There must be something wrong with that house, it's been on the market so long and it hasn't sold even though they keep lowering the price."
Determining your bottom line
Considering your ideal time on market and the "staleness factor" it's time to go to the next step. How much do you need to net from the sale of your home? What is the amount that you see as reasonable?
Pricing strategy – a quick sale by undercutting the competition
If you want to ensure a timely sale, then set your asking price 2-3% under comparable homes in your market. Check the comparables occasionally to make sure you're still priced under the competition.
Pricing strategy – maximizing your net proceeds
Choose between starting with a firm price that's acceptable to you and sticking to your price (make sure it is compatible with current market conditions) or pick a price and add a few thousand dollars for a negotiating margin. Be careful not too price too high and fall into the staleness factor trap.
What really works?
The best way to determine the asking price for your home is to look at properties that have sold over the past few months, look at current homes for sale that are similar to yours in the same area, look at pending sales, and look at expired listings. By analyzing this information you will be able to determine a price range for your home. The best way to get this information is to contact a professional real estate agent and ask them for a comparable market analysis (CMA) on your home. Choosing the correct asking price your home will sell much faster because it will attract more attention and potential buyers
Your home is only worth what someone is willing to pay for it so price it right and it will sell in a reasonable amount of time.