Pricing your home correctly is critical to a successful sale as it will help your home sell faster and for top dollar. Determining a home's asking price involves comparing similar homes that have recently sold while also investigating local market trends. In the end, the market will determine your selling price so it's critical you do your research upfront.
Start by evaluating the recent sales in your area that are similar in square footage and age. You'll also want to examine the number of bedrooms & bathrooms, the home's condition and other issues like surrounding houses (ie. is it the biggest house on the street). Don't forget to consider homes which have recently expired as well as those that are currently for sale.
Some people believe it's okay to list a home at a higher price because they can always reduce it later on; however, this often backfires as the home will develop a stigma if it sits on the market too long. A huge buzz is created when a new property hits the market but if it sits there, it will quickly lose its appeal and become stale. "How long has it been on the market?" is one of the first questions buyers ask. If it's been a while, they won't feel the need to make an offer right away. If on the other hand it's just been listed, there's a sense of urgency!
It's a common belief that sellers don't have anything to lose by overpricing their home as they won't lose out on any offers as they feel buyers will just offer what they feel is fair. This however isn't always the case since many buyers are hesitant to attach their name to a low offer as they don't want to insult the seller. Many buyers are intimidated by the negotiating process and feel they'll be wasting everyone's time with an offer that's so far off the asking price.
Timing is also a key issue. The Spring and Fall are traditionally the best times of year to sell so overpricing your home and having it sit on the market may mean you miss out on the peak time of year. Furthermore, carrying costs such as insurance, taxes and utilities will quickly build up if you get stuck carrying two homes at once.
Having your property sit on the market is also inconvenient as you'll need to keep it ultra clean for potential buyers who will want to come and see it on a moment's notice. Overpricing your property may also mean you unintentionally help your competition as buyers will see other homes in your area as better deals since they're less expensive. If you price your home at market value, those same buyers will consider your home more seriously.
Setting an asking price isn't an exact science and market factors (buyer or seller markets) make a huge difference so make sure you do your research ahead of time so you're able to best estimate a competitive asking price. The best case scenario when listing your home is that it sells quickly and for top dollar. To achieve this ideal scenario, make sure you don't overprice your home.
