Thinking about selling your home? Pricing your home right can be a bit tricky. Zillow.com warns sellers to keep your expectations realistic, and don’t fall for these seller myths…
- You always make money when you sell a home. Sure, real estate tends to appreciate over time: The National Association of Realtors® estimates that home prices will jump 5% by the end of 2017 and continue rising 3.5% in 2018. But selling your home for more than you paid is by no means a given, and your return on investment can vary greatly based on where you live.The NAR also found, for instance, that the cost of single-family homes increased in about 87% of the metros it studied, but prices actually dropped in 23 markets. So don’t assume you’ll walk away with a profit until you’ve examined what’s up in your area first.
- Price your home right to make big bucks. We know what you’re thinking: “Hey, it’s worth a shot!” But if you start with some sky-high asking price, you’ll soon come back to Earth when you realize that an overpriced home just won’t sell.“While the payday might sound appealing, you’re actually sacrificing your best marketing time in exchange for the remote possibility that someone will overpay for your home,” says Kathleen Marks, a Realtor® with United Real Estate in Asheville, NC.
While certain buyers might be suckered in, this becomes far less likely if they’re working with a buyer’s agent who will know all too well when a home is overpriced, and advise their client to steer clear. And this can lead to problems down the road (as our next myth indicates).
- If your home is overpriced, it’s no big deal to lower it later. Sorry, but overpricing your home isn’t easily fixed just by lowering it later on. The reason: Homes that have lingered on the market for months—or that have undergone one or more price reductions—make buyers presume that something must be wrong with it. As such, they might still steer clear, or offer even less than the price you’re now asking.Bottom line: “Price your home appropriately from the beginning for your best shot at having a quick and easy sale,” Marks recommends.
- Pricing your home low means you won’t make as much money. Similarly, sellers are often leery of pricing their home on the low end. But as counterintuitive as this seems, this strategy can often pay off big-time. Here’s why: Low-priced homes drum up tons of interest, which could result in a bidding war that could drive your home’s price past your wildest dreams.
- You can add the cost of any renovations you have made. Let’s say you overhauled your kitchen or added a deck. It stands to reason that whatever money you paid for these improvements will be recouped in full once you sell—after all, your home’s new owners are inheriting all your hard work.The reality: While your renovations might see some return on investment, you’ll rarely recoup the whole amount. On average, you can expect to get back 64% of every dollar you spend on home improvements. Plus that profit can vary greatly based on which renovation you do.
- A past appraisal will help you pinpoint the right price. If you have an appraisal in hand, from when you bought or refinanced your house, you might think that’s a logical place to start to price your home. It’s not!An appraisal assigns your home a value based on market conditions at a specific date, so it becomes old news very quickly. In fact, lenders typically won’t accept appraisals that are more than 60 days old.
“Since lenders know markets can change in six months’ time, it’s important for sellers to understand that a previous appraisal is never a reliable source for the current value of a home,” Marks says.
- Your agent might overprice the house to make a bigger commission. Don’t even go there, says Realtor Raena Janes of RJHomes in Tucson, AZ.“While it’s true that an agent’s commission is based on the selling price of a house, the disparity will end up being negligible,” she says. For example, the difference in commission between a $300,000 house and one that’s $310,000 is about $150.
“No real estate agent is going to lose a sale for the sake of a couple hundred dollars,” she explains.
The best way to get your home priced right is to rely on the knowledge and experience of your real estate agent. If you don’t yet have an agent, our team would love to hear from you! We are constantly studying the real estate market to stay up to date on the current trends. We are ready to help you get your home priced right. Give us a call today @ 720-593-2014!