Price it Right

Prepare for bargaining. You could set a fair price and then refuse to bargain. But that would deter all those people who hate to pay full price for anything and like to feel they’re “getting a deal.” Better to leave a little room for negotiation by asking slightly more than you expect to get, say, 5% to 10% to above appraised value. If sales are brisk in your area, you might just end up getting top dollar.

Overpricing can cost you. Many sellers don’t realize that overpricing can result in their getting less for their house than if they priced it right initially. The reason is knowledgeable agents and buyers often won’t bid on a severely overpriced house. By the time the seller decides to lower their price, many of best prospects already will have bought other houses. An overpriced house can end up being sold for less than it would have a few months earlier.

Some sellers who don’t have a deadline for selling will cling for a long time to their overly high asking price. They probably won’t get it, and even if they do manage to sell a year later for the original price, it will be because a rising market finally caught up with their price. This isn’t a smart financial strategy because it ignores the time value of money. In the 6-12 months that they waited, the rest of the real estate market probably wasn’t standing still. The next home they buy may have gone up in value by at least the same margin and possibly more. And if interest rates are rising, their mortgage may cost more.

Consider the Agent’s Motivation. If a competing agent suggests that you list your home for an amount that sounds too good to be true, it probably is. He or she may just be trying to get the listing, knowing that after the house sits on the market for awhile, the agent will suggest a new, lower price more in line with the market.

On the flip side, underpricing your home can deprive you of money that’s rightfully yours. Unless you are in a big hurry, aim for full market value. Avoid overeager or unethical agents who suggest a price that will assure you a quick and easy sale – one that won’t require an investment of time, effort, or money on their part.

Study the comparables. To price your home right, shop your competition. To be comparable, a house that sold has to be close to yours in age, style, size, condition and location. Try to find at least three homes (comparables) that have sold within the last six months. The more current they are, the better. You need to know: How long did each one take to sell? How much of the spread was there between the original asking price and the actual selling price in each case? Is that the normal differential? Has anything occurred to warrant setting a higher margin?

Get an Appraisal. If your idea of what your property is worth and the listing broker’s recommendation don’t coincide, an appraisal may be in order. The $250-$500 it will cost is money well spent. An objective appraisal prepared by an experienced, licensed professional comes as close to an objective evaluation as you can get.