The 3 Most Common Home Pricing Mistakes

Richard Payne
Richard Payne
Published on February 21, 2018

 

Have you ever lived in a neighbourhood where one of the homes for sale seems to sit for an especially long time with fewer and fewer people viewing it?

It’s a nice enough home, right? Lots of curb appeal and you’ve seen the interior and it’s really nice.

So, question is….why isn’t it selling?

In a word?

Overpriced

Even worse, if it was originally overpriced and has experienced a series of price reductions, the home is stigmatized.

What this means is that homebuyers think that there is something wrong with the home and most of them won’t even bother to look at it.

So, if you’re considering selling your home and want to “experiment” with pricing, beware of these 3 common home pricing mistakes.

1. Pricing too high out of the gate

It’s common knowledge in the real estate industry that overpriced homes take longer to sell.

Now, don’t take that to mean that eventually you’ll get your price, because if you’re overpriced, you won’t

In fact, plan on making 5 percent less than your listing price if the home sits on the market for two months with no offers.

At Halifax’s average home price, 5 percent represents more than $14,000. Unless you overpriced your house by that much, that’s a loss that has to hurt.

If this isn’t enough to show you the importance of pricing your home appropriately when it goes on the market, I don’t know what is.

The first lesson in pricing real estate is, that to realize the most money you can from the sale of your home, price it right.

2. Relying on online home price estimates

Many homeowners start out by doing an online “see how much your home is worth today” pricing estimate, which is great. However, there is simply no way anyone can make an accurate estimate of market value without having seen the home.

Furthermore, since online sites don’t have access to all of the MLS listings and, most significantly, the sold listings (which is what market value is based on), their algorithm is faulty.

Never rely on a website’s estimate of your home’s value

The only way to truly know how much your home is worth is to have it professionally appraised. The second best way is to ask a real estate agent to compile a comparative market analysis (CMA).

Since agents use many of the same techniques as appraisers, they typically match or come quite close to the appraised value of a home. 

3. Basing your price on your neighbour’s asking price

When you consider putting your house on the market, it’s only natural to want to know what your neighbors are asking for their homes.

Keep in mind, however, that this figure represents what your neighbour hopes to get for his or her home, not its actual market value.

The true market value of a home is based on what buyers actually paid for nearby homes, similar to yours.

I like to think of list pricing as “fantasyland” and sales pricing as reality

To that end, I try to dissuade my home-selling clients from basing the price of their home on some pie-in-the-sky figure that may not reflect reality.

Determining the value of a home includes far more than checking sales prices. I am happy to show you – at no obligation — what I do to determine the current value of homes and to provide you, free of charge, an analysis of your home’s value. Call me any time.

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