Step 3: Determining the Listing Price for Your Home
Here are two things most real estate agents won’t tell you…
- Neither you nor your Realtor® decides what your home is worth
- The listing price has to appeal to 4 separate “buyers”
Let’s look at each of these statements.
“Neither you nor your Realtor® decides what your home is worth.”
True! Although you are 100% in control of the listing price at all times, the MARKET decides your home’s value. Fortunately, I’m trained to evaluate the market to determine a listing price that will get the most out of your sale. In addition to reviewing your home’s size, configuration, age, amenities, and condition, my evaluation of your property will also take the following factors into account:
- Current state of the market – Is it a seller’s market, a buyer’s market, or on its way to one or the other? This is determined by a complex interplay among buyer demand, inventory, interest rates, mortgage qualification guidelines, and home prices.
- Recent sales/comparables – What have homes like yours sold for recently? What is the average number of days on market?
- Timeline – How quickly do you need the sale to close? Would offering incentives such as a “pre home-sale inspection,” a homebuyer’s warranty, financing assistance, or selling Agent bonuses bring you more buyers and speed the process along?
- Appraisal requirements – Will the home appraise at or above the listing price?
I monitor these factors throughout the time your home is listed with me. If any of them changes significantly, I will alert you and together we can determine the best way to leverage them to your benefit.
“The listing price has to appeal to 4 separate ‘buyers’”.
It sounds strange, but it’s true. The listing price on your home has to appeal to 4 separate “buyers” (and usually in this order):
- Other real estate agents who have buyers looking for homes
- The eventual buyer
- The appraiser
- The underwriter
For each of these “buyers,” the key is the same: they need to see a strong match between the listing price and their expectations for your home, or the deal will fall through.
This graphic helps you see that most buyers (60%) buy *at* market value. As the listing price rises above market value, you see a corresponding drop in the percentage of buyers willing to buy at that price. Similarly, when the listing price drops below market value, you see a corresponding increase in the percentage of buyers willing to buy at that price. Therefore, the “sweet spot” is a listing price close to market value. This pricing strategy will expose your home to a greater percentage of prospective buyers, thus increasing your chances for a sale.
In some markets, the movement from one phase of the cycle to the other can take years. In other markets, we can see all of the phases in the course of a single year. I bring value by applying my knowledge and experience to know exactly where the market is when you want to sell.
Free, No-Obligation Home Evaluation
Curious to see an estimate of what your home is worth? Click here and complete the simple form for a free, no-obligation home evaluation.
Click to view Step 4: Marketing Your Home for a Great Sale