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How To Price Your Home to Sell Fast!

How Do You Price Your Home to Sell Fast?

In today's market, it is more important than ever to price your house well, so how do you come up with the price? From years of buying and selling houses sellers have disclosed to me the different ways that they have determined their asking price. In this article, I explore the different ways people come up with their prices and comment on what seems to work and not work.

The number one thing I hear is "that's what I want". It sounds like a good answer, right? Unfortunately, most of the time, the price is so far off from what they can get for it, that is a disservice to not inform them of the current market value. I realize that most of these folks have absolutely no experience buying or selling houses. Their property may have been inherited. The property may be the only one purchase experience under their belt and they do not understand that that pricing strategy doesn't work. It would be like trying to sell a 2000 Honda Accord for 1 million dollars because that is what I want. If I went into a dealer and told him I wanted 1 million dollars for my Honda, do you think he would give it to me, just because I want it? Of course he wouldn't, so why is anyone going to give a seller what they want if the house is not worth it? Yes, we all have a number in our head, but please make the number be based on logic and not on greed. Get an appraiser and real estate agent to give you their opinion. You can shop the competition to see where you should price yours, but even with that there is still some caution to be taken on that pricing strategy.

The second most common thing I hear is, "well my neighbor has his listed for x and mine is better, so I want y". Just because your neighbor has his listed does not mean he will get it. If you look at the 5 % of houses that sell out of the 95% that don't sell, he probably won't get it. I look at the price of sold houses, not listed. This is crucial to help you gather information to come up with a price. The key is to look at the sold houses in your neighborhood first, and then look outside of the zip. If nothing is selling in your neighborhood, people may be getting better deals elsewhere. My zip code used to be the fastest selling zip code, but when the market turned, and builders were giving better deals in other zip codes, our sales plummeted. It was like the Gold Rush...people abandoned land and their homesteads in hopes of going to find gold because it was the best deal at the time. Even if you use this information above, you still have to make sure you are comparing apples with apples. This leads us to our next pricing strategy.

Sellers seldom seem to compare apples to apples. What does that mean? It means that if a three bedroom house sold for a certain amount, the seller thinks he should get the same amount for his two bedroom house. I know some agents will divide the sale amount in the neighborhood by the total square feet to try to get a price per square foot for the two bedroom house. The problem I have seen over and over is that most people want the most house they can buy. Studies have shown that three bedroom, two bath houses are more in demand than any other type of house. Why is a buyer going to pay you $10,000 less for your house, when for a slight increase in payment, they can have the three bedroom house. If you have a two bedroom house, I recommend making sure it is priced a lot lower than a three bedroom. Yes, there are single people that want them, but for a whole lot less than a three bedroom. There is a reason that more three bedroom houses sell than two bedrooms, same with 2 bathrooms opposed to 1 bathroom. To be blunt, when it comes to single family homes, one and two bedrooms are a dying breed, difficult to sell, and do not command a lot of money, even if it is in excellent condition. Some sellers price their home based on the condition. This is our next touchy subject.

It is very hard for sellers to not be biased. They don't see all of the little issues with their house that a buyer sees when looking at the house. The scuff marks on the floor, the crammed closets, the toothbrush on the countertop, the torn screen, are just some examples of things buyers pick up on. The only thing I can link this too is weight gain. It is really hard to see the weight creeping up on you when you see yourself every day. The same is true about your house. You will never notice all of the little things that tell buyers the house is not immaculate and is neglected. I can't tell you how many times sellers tell me there is nothing wrong with their house. They really believe it, only to be shocked when a home inspector comes back with a twenty page report that scares the crap out of the buyer. Now you have to do damage control: fix everything on the report, discount the property more, or lose your buyer and deal with another fun process of people tromping in and out of your house looking at all of your personal items (maybe even stealing them). Sellers get defensive about these inspections reports and say , "I don't care, I won't fix it", in this market you will lose the buyer because there are tons of people that will do anything to sell their house. So, please be brutally honest with the condition of your house and price it correctly.

Do your own research! Another area that frustrates me is that I see agents price your outdated house that based on the price of a house totally renovated. Even if your house is decorated nicely, buyers still love new. They love new cabinets, new paint, new mirrors, new vanities, and anything else they can get new. They especially love new carpet, so they don't have to worry about finding your dirty toenails. If you are in a neighborhood that is in high demand, maybe you can get close to the price of the renovated home. The real question is "How many neighborhoods are really like that today?" Don't just list your house based on the price someone else gives you. Gather as much data about your competitors to make an educated guess. Be flexible in pricing dropping if no one is looking at it. If you are not willing to try different pricing, don't list it. I see houses with the same price for over two years. Come on, if that doesn't speak volumes, I don't know what does.

There are lots of other ways people come up with their house values, but for now, I think we have covered enough for you to chew on. Our next article will focus on why appraisals aren't always your key to pricing your home.

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