For homeowners who are thinking about selling their homes, pricing a home for quick sale - and one that gets you the most money - is tough. For most homeowners, the calculation they have in their head is a kind of improvised recipe that almost never turns out to be what they imagined getting.
You see, just as with cooking, unless you're a cook that's very skilled, experienced and well-educated in the craft, improvisation rarely fails to end up with heartburn.
Most improvised recipes go a little like this:
- 1 heaping scoop of "I put $100K into it so I'm adding that to the price."
- 1 heaping scoop of "I just redid the kitchen and it looks fantastic! That's worth 2X what I paid."
- A big dash of "My neighbor just got _____ and my home is better!"
- A sprinkle of "I searched Zillow and here's what other people are getting for homes like mine."
- Several pinches of "I just paid ______ for it 5 years ago, so the value has jumped ___% by now."
- Simmer for long time with "I'm not budging off my price! No way."
- Huge heap of "My home will sell fast. I know it."
Sadly, this is a very common recipe that will leave a very, very bad taste in your mouth as you try to sell your home.
Smart sellers follow a better script to the letter.
Whether you're an FSBO or a homeowner planning to engage a real estate pro in the sale of your home, the best thing you can possibly do is seek out the advice of an expert in your area who can use accurate data points to strategically price your home for the fastest sale and highest value:
- Overall real estate market trends for the last 6 months
- Market and pricing trends for the last 12 months in your neighborhood
- Listings and closes comparable to your home's "true" features (not what you think about your home)
- Volume of buyer interest in your location and your home's types of specific features
- Closing price data and differentials from offered price for comparable homes
- Specific buyer challenges and objections to your home's specific features (outside what you feel about your home)
- Marketing costs to put your home in front of the right buyers
- Current home inventory, mortgage and lending conditions
Again, to use the cooking metaphor, you should trust the tried and true guidance of an expert with access and experience. In other words, you can throw some stuff together yourself or you can get it right the first time by leaning on a Martha Stewart, Mario Batali or Paul Hollywood.
What's more, at present, getting a good home valuation has never mattered more.
With home inventories still low and prices still rising along with mortgage rates and wait-times for obtaining a mortgage, it's a must you get the price right the first time to even know which potential buyers to engage with in the first place.
Otherwise, you could end up wasting months and missing your market window dealing with a buyer who never qualifies or gets approved for your price.
"The current lending climate is changing almost daily." says Mark Markelz, top Realtor in Fairfield, Westport, Southport and Trumbull Connecticut. "Rates are rising and it's taking longer for buyers to get final approval which in turn is affecting how buyers price their homes."
For certain, rates are already up many more basis points than even predicted last Fall just after Mr. Trump's presidential surprise. Rates are predicted to rise to over 5% in the near term and Goldman Sachs just issued guidance that they feel mortgage rates will jump 150 basis points by 2019.
How does this affect your pricing? A few recommendations:
- Work with a real estate pro to create a price strategy with contingency plans (TIP: You can always lower a price, you can't ever raise one so get your value correct right out of the gate)
- Be realistic (TIP: Take emotion and "pride of ownership" out of the equation and price fairly for a better chance of smooth sale - the data doesn't lie)
- Don't use Zillow (TIP: Zillow valuations tend to produce an immediate emotional reaction that causes buyers to miss out on a sale by over-reacting towards a higher price or turning down good offers or negotiations)
- Prepare for give-and-take (TIP: Plan ahead for things you'll budge on and things you won't then assume you'll have to budge on 25-40% of those "won't budge" items to get a good sale thru)
- Spend a little to make more (TIP: Psychologically, buyers subconsciously get a sense of whether what you're asking is worth it by how well your home looks and smells when they first enter the door or - more usually - see it online. De-clutter, emphasize natural light, clean it up and keep it clean. Get good photos too or you're hurting yourself big-time).
- Train for a marathon not a sprint (TIP: Be ready and plan for a sale that takes a year - and the commitment to keeping your home sale-worthy for the whole time).
"Homes that look good sell faster. Period." Markelz says. "If buyers see two similar homes at roughly the same price, but one oozes care and pride of ownership? Which do you think a buyer will go for?"
What's your home worth?
Get an accurate valuation now.
About the Author
After having spent my career in Information Technology and government service for the US Intelligence Community, I'm helping build a better, more direct way to connect home buyers and sellers. We think real estate can be a better, more convenient experience for everyone involved and we're out to make it happen! Our solutions will change the way buyers, sellers and realtors market themselves and connect with one another. We're just getting started! In fact, it's our goal to make the home buying and selling experience as much as possible like what we've all become accustomed to with the likes of Amazon, Zappos, LetGo and other powerful, simple, easy and convenient solutions that have transformed our lives as consumers.Follow on Twitter More Content by Rebekah Polancich