Pricing Your Home Accurately
Pricing your home accurately is key to selling it quickly.
If you’re gearing up to sell your home, it’s critical to price it correctly from the get-go.
I just ran a report on homes priced between $230,000 and $330,000 in the 2019 DFW market, and at a median price of $280,000, 50% of all home sellers lost an average of $4 per square foot. You might not think that’s a big deal, but that’s $22,000 of lost revenue that could’ve been rolled into the next property. In most cases, that accounts for roughly 20% of a down payment.
How do homes commonly get priced?
The most popular way is to use a CMA, or comparative market analysis. This is what most agents use to price a home. While a CMA can show you the street-level sales history of a subdivision, it can’t tell you what attracted buyers to those homes in the first place, and whether price was a factor.
An appraisal is another common method. When you snag a buyer, the bank will hire an appraiser for your home, and they’ll valuate it based on what happened in the past. Since you’re selling your home in the future, it’s important to look at the absorption rate of the recent past. If four, five, or even 20 homes sell in the same ZIP code, you can tell how quickly homes are selling in that area month over month.
"You don’t want to rush your home onto the MLS with the wrong price."
When my team and I valuate homes, absorption rate is one of the metrics we use. Just like when dealing with the stock market, we want to know how long it will take to bring you results. In today’s market, if your home spends 30 days or more on the market, people will assume there’s something wrong with it. How you want to price your home is up to you, but remember that your price is acid to your equity. In other words, the longer the home is on the market, the less you’ll get for it.
If you hire a professional to help sell your home, a great way to price it correctly is by posting it as a “coming soon” listing. On our team, we advertise homes 14 days before they hit the market by using amazing photography and video. We want to maximize interest in that property, but we won’t show it to anyone yet. Everything gets funneled toward the open house. That way, you can judge the amount of activity you get. If it’s a ghost town, you know something’s wrong with the price before the home goes live on the market.
You don’t want to rush your home onto the MLS with the wrong price because you’ll be testing the market for months before even considering a price correction.
If you have questions about this or any other real estate topic or need help buying or selling a home, don’t hesitate to reach out to me. I’d love to help.