Whether you’re selling your personal property or investment property, setting an accurate asking price is essential to getting it sold quickly and maximizing profit. Many homeowners will make the mistake of comparing their home to their immediate neighbors’ homes, which often causes them to overprice their home. There are better strategies than merely looking at next door homes to set an accurate asking price.
Your dilemma
If you overprice the home, you’ll lose out on some people coming to look at the property at all. They or their realtor may already know the house is overpriced just by looking at it on the MLS, so they’ll exclude your property right away. Then, a few weeks later when you’re considering lowering the asking price, those potential buyers will have already moved on.
If you underprice the home, you could end up losing money. However, sometimes when you underprice a house, multiple offers will come in, which can drive the price up. Good news is that pricing is a science that you can practice and get better at over time.
Comps
To come up with an accurate asking price, pulling comps is essential. Comps are comparable homes that have sold in the neighborhood in the last few months. Usually, an appraiser won’t go beyond the three-month range and will look at homes that are within a half mile if the area is well populated. If the area is rural, an appraiser will look further.
If you’re the one doing the comps, here are some tips to consider:
Compare the age of the homes – When looking for comps, if your home sits between houses that are old and houses that have been constructed recently, you’ll want to consider that. What’s the general assumption from others? Do the old homes take away from the new or do the new add to the old?
Already sold homes – If you’ve got a realtor, they’ll give you a Competitive Market Analysis (CMA), which are comps from recent sales in your neighborhood. This analysis looks at the details of the home, how many days on the market, and the price the home sold for. If you’re not using a realtor, you can come up with your own CMA, but you may also want to ask a couple of realtors for a CMA too, as some will be willing to provide you with this.
Square footage – You want to be sure that the home’s square footage is within 10% of yours.
Review expired listings – Take the time to review the final sale prices of recently sold homes. See if they required several price cuts to sell. This way, you can see if perhaps they were overpriced and learn from this.
Use psychology pricing – Numbers do have a psychological impact, which is why psychology pricing encourages people to price with an odd number a little under a round number. This means asking $299K instead of $300K or $149,999 rather than $150,000.
Use ProfitGrabber to make it easy for you – If you have our ProfitGrabber software, one search will get you up to 50 comparable sales depending on the search criteria you used. ProfitGrabber uses the same LIVE data feed banks and title companies use, so the result is accurate data that you can rely on.
What if you overprice?
What if you list your home and quickly notice that you’ve overpriced it? It’s actually more common than you may think, as a Zillow Consumer Housing Trends Report says that about 60% of sellers end up lowering their asking price at least one time. If you realize you’ve overpriced, simply adjust immediately.
Pricing your home
Once you’ve gathered all the data, analyze it based on market conditions. Let’s say your comps come in around $200K. If the market is strong and there are plenty of houses on the market, you may have to price your home just at $200K and perhaps settle for a bit less. If there’s little inventory, maybe you can increase your asking price by 10%. If the market is reasonably balanced, you may want to look at your comp prices and make adjustments based on market trends.
Setting an accurate asking price is essential, so be sure to do your homework or make sure your realtor is doing theirs. If you’re an investor, you’ll get better and better at setting asking prices just by nature of being in the business regularly. No doubt you’ll continue to learn tips and strategies and become adept at setting more accurate asking prices.
Request FREE Funding Kit and Discover How To Legally Bypass Banks And Gain Direct Access To "No-Credit-Required" Funding You Can Use To Achieve Your Financial Freedom... Start Now!
