Home Selling Prices: How to Set Your Listing Strategy
Setting up appropriate home selling prices is one of the crucial components of selling your property for an ideal price. An inappropriate pricing strategy may cause you to delay in time, more endeavor, and even money loss.
There are mainly 3 ways to price your property: price at market value, underpricing, and overpricing
1. Pricing at market value
Pricing at market value is a safer and more neutral play.
How does it work
- It requires that you work with your realtor to come up with a proper number after competitive market analysis, comparison, and considerations.
- It also needs your realtor to create a marketing strategy based on your priority to enlarge the exposures to the potential buyers.
It basically goes with a first come first serve policy. However, you can still set an offer presentation date to have all the potential buyers competing with each other, which opens the channel for a buyer to pay over asking.
Benefit
The benefit of pricing at market value is to generate a reasonable number of showings and to attract buyers who know the market and who are serious.
Depending on how fast the marketing is moving, your price may need adjustments to reflect the most recent comparable sales.
2. Price lower than the market value
Does it always work?
It is not uncommon to see that so many offers were presented on the bidding day and over hundreds of thousand dollars sold over asking for a property in the hot market.
However, it doesn't necessarily mean the underpricing strategy always works. Sometimes it backfires.
Considerations to make this strategy work
What is the market situation
What’s the property location, features, condition, and special reason to drive up the demand
How many competitive comparable properties are in the market?
How do your potential buyers view this pricing?
Your personal circumstance and priority
Special considerations on a cooling or neutral market
In the cooling market when the market is starting to decline or In a neutral market when the supply and demand are at equilibrium, setting up a lower price would stand you out and thus may attract comparatively more buyers and help you sell the property faster.
It eventually saves you money and time. However, if your prediction goes south, you leave more money on the table.
Special considerations on overdoing it
- In the hot seller market where the inventory is lower than the demand, underpricing would attract more potential buyers if your home is in a hot sought after neighborhood, your home features and condition stand out, you have less immediate competition, and the buyers are educated and willing to start a reasonable bid.
- Most importantly, it may increase the chance to catch a buyer who is irrational, in a panic, not doing the due diligence, and who will pay a much higher price than market value.
- However, it may backfire when the buyers are averse to this practice and even do not bother to book a showing.
- When the buyers are aware that the true market value is far out of the budget, it may end up with many offers far from your expectation, particularly in case of extreme underpricing.
3. Price higher than market value
- Overpricing occurs when the seller may have an over-ambition or a wrong illusion from the realtor.
- It has some obvious drawbacks such as being a butt for other comparables, lack of exposure, extensive time on the market, inviting the buyers for a hard bargain, or being forced to relist with a lower price.
- However, it is not accurate to say this method never works. Say, if the buyers fall in love with your property and it happens that they haven't done much homework on market value, this high price could be an anchor.
In Sum
An overall consideration, a thorough analysis of those strategies, and a balanced prioritization vs profit are recommended on how to effectively price your home.
Our services include setting up a satisfactory listing price strategy at a marginal realtor fee
