First, determine your motivation.  Your motivation will tell how long you are willing to wait for your home to sell.  If you are busting at the seams, your motivation may be greater than someone thinking they might like a new view.  Okay, so you have determined your motivation.  Now what?  Just pick a random price?  Price your home in the general ballpark of the other homes for sale in your neighborhood?  In the past, this approach may have worked.  But now that the housing market has homes in varying condition and status, it would be tough to price a home in this way.  Additionally, with the tension in the mortgage industry, and mortgage giants Fannie Mae and Freddie Mac struggling, pricing a home properly is an absolute must.

Let’s look at pricing strategies.  Perhaps you would like to sell your home quickly.  Intuitively, it may seem best to price the home very low.  Imagine what would be going through a prospective buyers’ mind as they are out in the field looking at homes.  All the homes they look at are similar in size and features (remember condition varies greatly at all price-points in the current market) until they get to yours.  Your home looks like a great deal because you either have more square footage, a finished basement, better features, and/or possibly nicer condition than those they have seen.  You would think they would immediately choose your home since it is priced to be such a “good deal”.  Unfortunately, often their first thought is more like “what is wrong with this home”?  Instead of selling your home quickly, it actually sits on the market because potential buyers assume something must be wrong for the home to be priced so low.

Another thought is to price your home high.  Doesn’t it makes sense that if you want to have room to bargain with potential buyers and still make money, pricing your home high is the way to go?  Let’s walk through what happens when you choose this option.  Statistically speaking, a new home for sale will draw interest over the first 4-6 weeks.  This is when the home is “fresh” and people are beginning to view it on the Internet and with agents.  After this initial period, the interest in the home flattens out somewhat and will either remain flat or decline until it sells.  If the price of the home is greater than others in the neighborhood or those of a similar style in the vicinity, buyers won’t give your home a second glance – even if it is beautiful.  Look at it from the buyer’s perspective, there are probably 20 or more homes for sale at their price-point.  Why would they buy the one priced obviously higher than the rest?

When you price your home higher than you should, one of three things will happen.  First, no one will look at or make an offer on your home.  The home then becomes stale and the price will begin to come down.  In this scenario, potential buyers will begin to think something is wrong with the home because it has been on the market longer than others and the price keeps dropping.  Eventually, if the home does sell, it will do so for less than it would have if it had been priced properly in the first place.

Second, if an uninformed buyer does make an offer when the price is high, the home may not pass through the appraisal process.  When a buyer and seller agree on terms, the home is then under contract.  The buyer’s lender will require an appraisal done on the property to deem that the home is worth the contractual price agreed upon.  The home must have supporting comparables (“comps”), or other recently sold homes in the neighborhood that are similar or the same as the subject home.  If there are no comparable homes sold for the high price you asked, the home will not appraise for the price on the contract, which means a lender cannot approve the mortgage.  This may pose further problems if the home being sold is unique from others in the neighborhood.  What you may once have thought of as special may now be an albatross that is difficult to place a value upon.

Finally, the home may not sell at all.  No one will look at your home, you will become frustrated, and ultimately may blame your Realtor© although they do not determine the price at which you list your home.  Unless you are willing to be realistic when you price your home for sale, there is no one that can sell your home.

So, to save yourself some time and alleviate stress, always seek advice from a Realtor to price your home appropriately.  A home that is priced properly has the best chance at selling.  Contact us today for a free market analysis of your home.  Our goal is to help you make the most money possible, in the least amount of time, and with the least hassle.