List Price Strategy

I think we know each other well enough now to have the big talk about pricing your home for sale. So much depends on the list price! It can feel like there's a lot of pressure to "get it right," but don't let that make you nervous.

Do you remember reading the Choose Your Own Adventure books? As you read, you answer a series of questions which direct you to different pages within the book and ultimately determine the plot of the story. Pricing strategy is much like those 1980's classics: the choice you make determines the plot of your selling story. There are three basic strategies to choose from:

Undervalue pricing

The best way to drum up instant interest in your home is to price it below market value. If you price your home 5% under the price of comparable sales, buyers are going to show up in droves. The idea here is to get so many buyers writing offers, that they start to compete with one another on pricing and contract terms. Navigating a multiple offer situation can be a little chaotic, but it's definitely a good problem to have. This strategy typically works best during the prime spring/summer selling season when there are more buyers than usual competing for a limited number of homes.

Market value pricing

Pricing at (or really close) to market value means you choose a list price that is close to the home's actual value. (A home's actual value is determined by looking at the recent sales data for homes that have similar size, condition, and features.) It's not going to get buyers worked up into a frenzy, but the price will not be so high as to alienate buyers either. This is a very chill approach: expect a decent offer or two in a few weeks or months right around your list price (depending on market conditions).

Needle in a haystack pricing

Here, you’re shooting for the moon. After all, there is a (small, very small) chance that the perfect buyer is on the hunt for a home just like yours. When the conditions are absolutely perfect, you might just pull off pricing your home above the market value. The thing is, everyone would love to sell their house for 15% more than what the market says it's worth, but few have the stamina. Expect this strategy to take several months, maybe even a year or more. If you are unyielding on price and your perfect buyer is not in the market at the same time you are selling, you might have to wait for the market to catch up to the list price (thus converting your needle in a haystack pricing strategy to an extremely slow market value list price strategy.

Also, if your buyer is getting a loan to purchase your home, an independent appraiser is going to evaluate your home to be sure the bank is not loaning more than they could recover should the loan default. Any discrepancy between the loan value and the home’s market value has to be figured out between the buyer and seller.

Which selling adventure will you choose? A good real estate agent will provide the data and insight you need to make the right decision and will help you manage expectations as the market ebbs and flows.