Do, Don’t and Data for Pricing Right
Pricing a house is a dynamic process. Factors change all the time. Here are the do, don’t and data sources to help you efficiently gather the information you need to price your house correctly from the start.
Do track local trends by setting up a spreadsheet with recent sales, active competition and your own house. Update this when you come across news and market stories. This will help you see where your price stands in a constantly shifting market.
Do monitor the latest mortgage rates and lending news at our Mortgage page, with fresh content delivered daily by LendingTree. The more you understand the financial factors facing buyers, the more equipped you are to price correctly, and to negotiate wisely.
Do make sure that buyers, their agents, and appraisers can actually see what you are selling. Declutter and staging isn’t just common sense. Clutter can cover beautiful features and frightening decay—but, if buyers and appraisers can’t see the condition of the house for themselves, you won’t be able to make a convincing argument for its value.
Don’t skip the appraisal. A professional appraisal will validate your read of the immediate competition. It arms you with a third-party opinion of the value of the house, which is a powerful negotiating tool. It is much harder for a bargain-minded buyer to pick apart a professional appraisal than it is to undermine your personal opinion of the value of the house.
Do check in with the Appraisal Institute. It offers valuable tools and books for buyers and sellers. The Institute’s website can help you understand what rules your appraiser must follow to comply with lenders’ expectations, regulations, and professional ethics. In the wake of the housing bust, appraisal regulations have change several times. Be sure to get the latest.
Don’t mistake your decorating as an amenity. When sellers list “designer drapes,” “Pottery Barn interior,” or “tastefully decorated,” they are trying to trade in on personal taste. If you brag about your decorating in your listing and marketing, you risk losing potential buyers who don’t share your same tastes. And when you sell by owner, you will make potential buyers uncomfortable if you are too obviously attached to your decorating during a showing. Gently neutralize over-the-top decorating; toning down deep colors to muted shades can make a huge difference.
Do base your value estimate on current market trends. It’s a huge strategic error to simply take the price you paid, add to it the cost of improvements, and use that as the selling price. What you put into the house may or may not have any relation to what it is worth now.
Don’t “try out” a higher price thinking you can drop it later. People will see right through your ploy, especially in a buyer’s market. You and your house will be dismissed as unrealistic. Buyers have many choices, and one of those choices is to wait. If you price your house too high, it will not sell, and you will reinforce the buyers’ willingness to wait for you to swallow both your pride and your price.
Do understand the cost of “holding firm,” especially if you really must sell, or cannot afford your house. The monthly carrying cost (mortgage, maintenance, taxes, insurance and other costs) will actually cost you more each month, if property values are eroding in your market. Consider adjusting the price now to the value the house will have after a couple more months of price declines, and get the sale accomplished.
For more about pricing your home, visit our comprehensive Pricing Guide.