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Pricing your house to sell requires a "Goldilocks" frame of mind. A price that's "just right" is the one that attracts a buyer, is in line with the market, and puts the most money in your pocket.
It took Goldilocks some time to find exactly what worked for her, but you might not have that luxury when selling your house. So here are some do’s and don’ts for pricing your home to sell.
Don’t price it too high
When selling a home, first impressions matter. Your house’s market debut is your first chance to attract a buyer and it’s important to get the pricing right. If your home is overpriced, you run the risk of buyers not seeing the listing.
Let’s say you want $299,000 for your home, but you list it at $315,000 to see if anyone will pay the higher price. A buyer with a budget of $299,000 may search online only for homes priced through $300,000. Because of the way it's priced, your home won’t appear in any of those searches, and you could miss out on a potential buyer.
Don’t price it too low
Listing a home below its market value is a strategy some sellers use to generate interest in the property and possibly spark a bidding war. It’s also used by sellers who need to sell their property quickly.
But price your house too low and you could end up leaving some serious money on the table. A bargain-basement price could also turn some buyers away, as they may wonder if there are any underlying problems with the house.
» MORE: How to sell your house fast
Do consider the comps
Comparable sales or "comps" are recently sold homes that are similar to yours in size, location and features. Armed with comps, your listing agent can put together a comprehensive report called a comparative market analysis, or CMA. A CMA can help you determine a realistic listing price.
“One of the challenges we have as a seller’s agent is to really pull back the curtain and show data,” says Michael J. Franco, a licensed associate real estate broker at Compass in New York City. “You have to prove to the seller that their place isn’t really different, unless it really is unique, then it deserves a premium.”
If you decide to go the for-sale-by-owner route, you can do your own comps or use an online home value estimator to get a general idea of the value of your home. But you shouldn’t take what you find on a home valuation tool as gospel, as it is only an estimate and could be based on incomplete data.
» MORE: See your home’s estimated value
Don’t overvalue your home’s upgrades
Spending $70,000 to renovate your kitchen and install a swimming pool means you can add $70,000 to your home’s selling price, right? Not always.
While some renovations may increase your home’s value, it’s unlikely you’ll get back the full dollar amount that you put in. Before investing in any improvements, look at comparable homes for sale near you to see if upgrades are in line with the neighborhood and if they appear to have an impact on resale value.
Don’t let your emotions get the best of you
Market research should be your guide when pricing a home to sell, not your emotions. A buyer doesn’t care what you paid for the house, the sweat equity you’ve put into the property, the years of memories you’ve created in the home, or how much profit you hope for.
“You have to separate yourself emotionally from the property,” Franco says. “Yes, hold on to your memories and the experiences you’ve had in the home. But when you’re selling, you have to focus on it as a business transaction. Chances are, it’s your biggest asset and you have to do what’s right.”
» MORE: The best time to sell your house
Do adjust the price or approach as needed
If, despite your efforts to identify the "just right" price, your home isn’t attracting offers, regroup with your agent as soon as possible. Try to figure out why your home isn’t selling and be open to making adjustments that will fix the problem.
Pricing: While it’s unlikely in a hot market, if your home is languishing without an offer, it may be necessary to drop the price. Perhaps the market has changed since your agent conducted the CMA. Take a look at some more comparable properties and adjust accordingly.
Marketing: Make sure there aren’t any errors in your listing. Confirm with your agent that the home is being shown in all of the appropriate places. Your agent may need to boost marketing efforts to increase the number of people who see your listing, like offering more open houses or posting 3D tours on social media.
Alternate ways to sell: If your home isn’t attracting a traditional buyer, you may have to look into other options, like selling to an iBuyer. An iBuyer is a real estate company that uses technology to buy homes with cash. While the process is typically faster and you don’t have to get your house ready to sell, iBuyers don’t operate in every market and you may need to have a specific style of home to qualify.
Condition: Talk with your agent about what improvements may improve the salability of your home, including necessary repairs, staging, or curb appeal upgrades. A little TLC can go a long way.