Setting the right asking price for your home is critical to getting a quick sale without leaving money on the table. How to price your home to sell fast involves careful market analysis, an understanding of buyer psychology, good timing, and competitive positioning.
This guide will show you how to price your house to sell fast and how long to wait before reducing your house price. With this information in hand and the guidance of a good real estate agent, you can come out of the home-selling process with a deal that works for you.
Setting an Initial Price
The most important part of how to price your house for sale is to set the right price when you first list the property. Listings get the most interest in the first 2 to 3 weeks. After that, they become stale, and potential buyers start wondering what’s wrong with the property. It’s a good idea to put a lot of time, effort, and research into how to price a house for sale right from the start.
Understanding Local Markets
How to price a house for sale starts with knowing what kind of market you’re in:
- A seller’s market has more buyers than homes for sale. In a seller’s market, properties command higher prices, and there’s more competition among buyers. However, over-pricing can easily backfire; price your home near the top of the range if its condition justifies it.
- A buyer’s market has more homes for sale than buyers. In a buyer’s market, prices need to be set lower. When deciding how to price your home to sell fast, aim for the lower end of the comparables in your area.
- A balanced market means that inventory matches demand. In a balanced market, aim for fair market value when deciding how to price your house for sale.
Focus on hyperlocal markets when setting a price. Neighborhoods can vary widely even within the same city; price your home against houses you’ll actually be competing with for buyers.
Identifying Comparables
A key element of how to price my house for sale is a comparative market analysis, which entails identifying comparable properties in your neighborhood. Here’s what to look for:
- Properties of the same type with a similar style, size, and condition, in the same school zone.
- Homes that have sold recently, ideally within the last 1 to 3 months.
Adjust for the following:
- Upgrades such as a finished basement, new roof, or modern kitchen and baths.
- Location details, such as being on a cul-de-sac versus a busy street.
- Features such as a large lot, swimming pool, or separate entrance to an in-law suite.
When making adjustments, make them to the comparable properties, not to your own. For example, if your home has a new kitchen that adds $30,000 to its value, reduce the value of the comparables by that much.
Using Buyer Psychology to Set the Right Price
Understanding price psychology plays a role in how to price your home to sell fast. These factors can make a big difference:
- Price the home slightly below a specific threshold. For example, if you would like to sell your home for around $400,000, price it at $399,900 rather than $402,000 so that it appears in searches for homes up to $400,000.
- Use specific pricing such as $489,900 rather than $500,000. Specificity signals that you’ve done your research and that the home is priced appropriately.
- Underprice slightly to spark competition among buyers if market conditions favor it. Listing at 3% to 5% below market can generate multiple offers and escalate the final sale price to market value or above.
- Adjust your price for the season. Homes tend to sell for higher prices in the spring and early summer than in the fall. They’re usually lowest in the winter when buyers are less active.
Common Pricing Mistakes to Avoid
Watch out for these errors when deciding how to price your house to sell fast:
- Pricing for your financial goals rather than for the market. The market will always determine what homes will sell for.
- Overvaluing renovations. You may have spent $50,000 on a new kitchen, but it might not raise the value of your house by that much.
- Using older comparables, focus on recent sales and homes that are currently on the market.
- Setting a high price with the intention of adjusting based on activity. This is a poor strategy that could cost you showings and cause your listing to become stale.
- Emotional pricing. You’re selling square footage and condition in the context of the current market and comparable homes. Be as objective as you can and enlist your real estate agent’s help to keep your pricing realistic.
Avoiding these mistakes will help you start your home-selling journey off on the right foot.
How Long to Wait Before Reducing a House Price
If you need to sell your house fast, decide in advance when you’ll drop the price. Here are some guidelines to follow:
- Week 1: If you have no inquiries or showings, that means your price is too high. Consider dropping it right away.
- Weeks 2 and 3: If you’re getting good foot traffic but haven’t received any offers, your price is close to market but not quite there. Consider a 3% to 5% reduction.
- Weeks 4 to 6: If you’re still not getting offers, it’s time to make a decisive reduction. Consider 5% to 10% lower to overcome the stigma of a stale listing.
As a general rule, reassess your pricing within 30 to 45 days. The longer you wait, the more of a reduction you’ll need to make.
How to Price Your House for Sale: Step by Step
Here is a systematic plan to determine the right asking price for your home:
Step 1: Evaluate your timeline: how quickly do you need to sell?
Step 2: Gather recent comparable sales data with the help of your real estate agent.
Step 3: Assess the condition of your home as objectively as possible, including updates that you’ve made and repairs or upgrades that a buyer might want to make.
Step 4: Make adjustments for differences between your property and the comparables.
Step 5: Determine a value range based on your adjusted comparable sales.
Step 6: Consider current market conditions to determine where to price within your range.
Step 7: Decide on an initial list price and a price reduction schedule if it becomes necessary.
Learning how to price your home to sell fast can be daunting, but the effort you put into it will pay off in a successful sale. Tap into your real estate agent’s skill and expertise to help you set a price based on the available data. This will ensure that you get the price and closing schedule that’s right for you.
