When you’re selling your home, setting the asking price is the most crucial factor. Yes, making sure your home is clean, tidy, and well-maintained are important too, but first, you need to get potential buyers through the door. Set the price too high, and you could wait for months or even years to sell; set it too low, and you risk losing thousands of dollars. Get it just right, and you’ll increase your chances of selling in a shorter time.
Who Decides on the Asking Price?
The ultimate decision on the asking price falls to the seller. After all, it’s your home, so it’s your decision to make. You may receive advice from a real estate agent on an appropriate price range, but they cannot force you to market the home at a price that you’re not comfortable with.
Unfortunately, this is where the problems often arise. Even after being advised on a price, sellers can have unrealistic expectations. We all like to think that our home is worth more than our neighbor’s—after all, it may have more square footage, updates, a larger yard, or more curb appeal. But the chances are that the real estate agent knows what they’re talking about when they discuss a sensible asking price and marketing strategy.
Priced Too High
More often than not, a home will be priced too high rather than too low, and there could be several reasons for this. In a declining market, it’s best not to try to sell at all. However, other factors may come into play, such as a new job in a different town. In this case, the seller must sell and hopes to break even on what they paid for the home. Unfortunately, a declining market dictates that it’s now worth far less than they paid for it.
Another common reason sellers price their homes too high is because they want to move to a more expensive home. They may want to climb the property ladder, but the only way to afford their dream home or neighborhood is by setting a higher asking price. Often, sellers try to set their price based on how much they need to get out of the sale, rather than what’s realistic.
A home priced too high will typically sit on the market for far longer than one priced more reasonably. Then, the seller has a couple of options—either wait and hope someone is willing to pay the inflated asking price, potentially never selling, or gradually reduce the price. The problem with the latter is that many potential buyers may first be put off by the high initial price. After several price drops, buyers will also start wondering what is wrong with the home.
Priced Too Low
At the other end of the scale, setting the asking price too low can create its own set of problems. On the one hand, buyers may be eager to snap up the home at a bargain price, but you could lose thousands of dollars in the process—if it sells at all.
If a home is clearly underpriced, some buyers may become wary, wondering what might be wrong with it that caused you to set the price so low. Additionally, if buyers are looking for homes within a specific price range, your underpriced home may fall below their threshold, which could prevent it from being considered.
So, How Do You Decide on the Asking Price?
Real estate agents are the first people you should talk to. They don’t just pull a number out of thin air and tell you what you want to hear—because, at the end of the day, the agent wants your home to sell too, so they can earn their commission. If a home is stuck on the market for too long, it’s costing them money to advertise it.
When you ask an agent to come and value your home, any good agent will do plenty of research beforehand. They will print out comparable properties that are listed for sale right now and those that have sold recently in your neighborhood. This way, they can compare your home to those, looking at square footage, updates, features, etc. By adding for certain updates or subtracting for things that need improvement, they can arrive at a realistic asking price.
But don’t just take the word of one agent if you’re still unsure. Most real estate agents offer free home valuations, so ask several agents to view your home and provide their opinion. You’ll probably find that they all tell you roughly the same asking price!
Once you’ve been told the price, it may be tempting to raise the asking price by a few thousand dollars to avoid losing as much when you sell. After all, it’s just an asking price, and you may receive lower offers anyway. However, the key is that if you’re priced sensibly, buyers will appreciate that and generally won’t make lowball offers. Setting your asking price at a realistic level—and being prepared to accept offers a little below that price—will help sell your home far quicker than one that is over- or under-priced.
