How to Price Your House to Sell

When trying to sell a home, correct pricing of that home is crucial, and the psychology that goes into determining a price can leave your stomach doing backflips.

Should you start out high and see if you can get top dollar? Should you start low knowing the competition out there is tough? If you just drop your price later, how many buyers did you miss out on at the start?

The decision to price your home is extremely important. Pricing your home not only dictates how much money you will make, it also dictates how many people will see your home. Here are a few things to consider before you set the price of your home.

Change Your Mindset

Emotional attachment to a home can end up costing a home seller thousands of dollars. Sellers tend to price their homes too high because they are stuck in the mindset of: My home is worth more because it’s mine.

This is called the “endowment effect” and is a psychological human emotion. We tend to think, even with something of little value, since we own it, the item is worth more than it really is.

Buyer’s don’t really care how much you paid for your home when you bought it. They care about what comparable homes are selling for today. This is a large step for home sellers to overcome.

You can’t price your home to sell for what you owe if the market says it’s worth less. Once you understand this and overcome the emotions of pricing your home, you’re on your way to a successful sale.

Identify your homes true value and price it just below.

For example; if your market analysis comes in at $250k, pricing your home at $245k will give you a lot more activity.

Even though you’re priced slightly below market value, with the amount of activity that price will bring, you may end up getting multiple offers which will drive the price back up. If you don’t get multiple offers, you will at least get an offer close to asking price.

How fast do you need to sell?

What’s more important to your situation: Time or money? If you need to sell within 30 days, price your home lower than if you could hold out for 60-90 days. You may get less with the 30 day sale, but you will get rid of the home faster. If you price for 90 days, you may get more money, but you’ll lose out on time.

If you sell within the first 90 days, you’ll be okay. If you’re home sits longer, you could end up losing a lot more money and time than anticipated with your original list price. Pricing your home too high will end up netting you less money in the long run during a declining market. You will end up chasing lower prices, and you should try to avoid that situation if at all possible.

If your home sits too long, don’t be afraid to get aggressive.

The longer your home sits on the market the more stale it becomes to buyers in that price range. Obviously, after sitting for an extended amount of time, your home isn’t worth what your asking.

To get out of that “stale” market, take decisive action and drop your price a substantial amount. By doing this, you will attract new buyers in new price ranges. If you drop the price in small increments, it’s like dying a slow death by torture.

Buyers can see all your price reductions, and it shows you’re getting more desperate the more you cut the price. A quick, substantial cut in price is going to give buyers a real incentive to take another look at your property.

If, after all of this, you still can’t get your home sold, it may be time to take it off the market or consider a short sale.

If you can’t afford to price a home at a price that will allow it to sell, talk to your agent about the possibilities of a short sale if you feel you need to go that route.