Friday, February 26, 2010

Pricing Mistakes When Selling Your Home, and How to Avoid Them

When selling your home, your pricing strategy can make or break your chances for a successful sale.  Listing your home at a proper price will encourage a buyer to snatch up your home for fear of losing it to another buyer, while listing too high can cause your home to sit on the market for months.  Especially in our current slower market, proper pricing is crucial.

In her article, "Pricing Mistakes and How to Avoid Them,"  Shannon Petrie of lists six mistakes that home sellers most often make.

Mistake #1: Forgoing research
Sellers sometimes base their prices on hearsay or by checking the asking price of the home down the street.  Instead you should base your price on a competitive market analysis, or cma, done by a real estate professional that looks at recent sales in the same area that are similar.  These cma's are usually free because agents are hoping to get to list the home for sale.  Another option is to hire a real estate appraiser to do the job.  Cost:  Several hundred dollars.

Mistake #2: Hiring the agent who offers the highest list price for your home
Beware of agents trying to "buy" your listing by suggesting an unrealistically high asking price.  This is unethical and costs you time and money in the long run, since you'll most likely have to cut the price later after being on the market a long time.  The agent you choose to list your home should be able to back up their list price with comparable sales data.

Mistake #3: Getting emotionally involved
Try to stay objective during the pricing process by focusing on the comparable sales in the cma.  Everyone thinks their home is the best home on the block, and worth more than it really is.  Listen to the agents you interview to see how your home really compares.

Mistake #4:  Pricing too high at the beginning
If the home enters the market over-priced, you've lost many buyers who otherwise could have afforded your home.  By the time you adjust the price, those buyers have already bought something else.  Then when you do put a proper price on the home, buyers want to know why it has sat on the market for so long.  Your best opportunity for a quick offer is in the first two weeks the home is on the market, so don't waste that time by being overpriced.

Mistake #5: Overpricing because you have "time"
Time does not equal dollars.  Being on the market longer actually costs you money.  Especially in a market where home prices are declining or just staying flat, being on the market longer is not a good option.

Mistake #6:  Chasing the Market
If prices are dropping and your home is overpriced, then as you lower the price, you are still falling behind the market that's declining.  List the home as competitively as you can from day one, and then assess market feedback and numbers of showings to see if further cuts need to be made.

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