You’ve cleaned out the house, spruced up the kitchen, and are finally prepared to put your property on the market. But perhaps the most important decision you haven’t tackled is the listing price for your home. Sellers need to understand one very important fact: A house is only worth what a buyer is willing to pay for it. So you do you get into the minds of buyers and determine what today’s market will bring? If you price it too high, buyers will stay away. If you price it too low, you may be leaving money on the table. So how do you arrive at that magical figure that will attract interest and ultimately bring in a contract?
Well, there’s actually no magic involved at all. Instead there are very concrete strategies that you can follow to decide on a listing price that will maximize your profits and minimize the amount of time your house is on the market.
Here are 3 things to do when deciding on a listing price for your Maplewood or South Orange home:
- Research the competition. Sure you can get a head start and find this information yourself on real estate sites like Zillow and Trulia, but here’s where an experienced real estate agent who knows your neighborhood will come in handy. He or she will put together a Comparative Market Analysis of comparable homes—“comps”—in your area listing the original asking price, what it actually sold for, and how long it was on the market. According to realtor.org, the last three months of sales are the most relevant, but look back at least a year to understand how prices are trending. In order to arrive at a “true comp,” look at houses with similar square footage, number of bedrooms, baths, and age and condition of home. Not all three-bedroom Colonials in Maplewood are worth the same. You can also drive by these other homes that have sold to see how they stack up against yours.
- Have an appraisal done. If you want an objective opinion, you can always invest $400 to $500 in an appraisal, which will give you an idea of what a lender thinks your home is worth. A buyer will have to have your property appraised as part of their mortgage process if they’re getting a mortgage, but you can also bring in your own expert so that you have a clearer sense of the value of your home. Just keep in mind that appraisals are typically on the conservative side, so this number may be less than what you can ultimately get from a buyer.
- Strategize with your realtor. Yes, you want the highest price possible for your home, but it’s not smart to set the listing price at an unrealistic high. Here’s why: Buyers and their real estate agents are savvy. They know the value of homes in your market, and if they suspect that a house is drastically overpriced, they won’t even come to see your home. No showings, means no contracts, and the longer your home is on the market, the more you’ll have to reduce your price. This is why that initial listing price is so important. Pricing it too high may actually result in you getting a lower price than you could have. But if after doing your research and discussions with your realtor you still feel strongly about a slightly higher price, you can develop a selling strategy with your realtor. For example, you could list your house at price X for five days and if there’s no interest, you can immediately drop it into a lower price range to see if that sparks interest. If there’s still no interest, you can lower it again right away. An experienced agent will be able to navigate you through these waters so that the right price is found in a short amount of time, eliminating the risk of your house sitting on the market unsold at a high price for an indefinite amount of time.
And as realtor.com says, “home selling is part science, part marketing, part negotiation, and part art. Unlike math where 2 + 2 always equals 4, in real estate there is no certain conclusion. All transactions are different and, because of this, you should do as much as possible to prepare your home for sale and engage the realtor you feel is best able to sell your home.”