An effective pricing strategy depends upon knowing the current market value of the home. You will use the current market value to determine the asking price that will get your listing the greatest amount of exposure and ultimately result in your home selling for the most money in the shortest time possible.
Your Bottom Line is the amount of money you will actually walk away with after subtracting all of the costs of selling your home. In other words, your Net Profit. The more accurate the information that you enter into the “Net-to-Seller Tool”, the more accurate your bottom line. This is the most important number needed to make your decision of whether to sell or not.
You’ve determined the amount you think you can get for your property in today’s market AND used the “Net-To-Seller” calculator to understand what your selling price means to your bottom line. Now is the time, before you invest more time, money and energy on the process of putting your home on the market, to decide whether or not it makes sense to list now. Here are some considerations:
- Is this sale going to net enough money to allow you to move to your next home?
- How much wiggle room do you have? What if you were wrong about the amount of money the market is willing to give you?
- How fast do you need to sell and does the value you are using for your home correspond to how quickly homes like yours have been selling for at that price point? If not, what price would help you sell your home sooner?
- What happens if you get an offer on the home tomorrow and they want to close right away? Are you ready to move? Do you have a place to go?
If your answer to the question “Should I Sell My House Now” is YES, then its time to determine what Asking Price you should list your home at. If you have already purchased a Home Value Report from us, you already have a suggested Asking Price.
1. Statistics of Last Quarter’s Over-Priced Homes: In a hot Seller’s Market, you will know if you are over-priced within days of putting the listing in the MLS. Over-pricing in a Seller’s market is not as dangerous as it is in a Buyer’s market, but it still has ramifications.
According to FMLS, in the 2nd quarter of 2013, almost 38% of the homes that sold required a price reduction from their original list price in order to get sold. This means that nearly 4 in 10 homes that actually sold, were over-priced from the beginning… and this does not account for all of the over-priced homes that never sold! The median percentage of how much sellers had to drop their price in order to sell was around 10%. However, more important than how over-priced their houses were is the effect of how much longer the home stays on the market.
2. Days on the Market Statistics: Days on the Market means the number of days between when the home was listed and when it goes under contract. In the second quarter of 2013, the median days on the market for a home that got the price right (meaning that the home did not require a price reduction to get sold) was 18 days on the market. When you look at the same Median Days on the Market for homes that came on the market “over-priced”, you find that these homes took 169 days to sell. That’s a difference of 151 days. Think of the implications. That’s over four months of:
- Having to make your bed and clean your house daily
- Having people come to look at your house at the worst times possible (doesn’t that always seem to be true?)
Besides the inconvenience, these extra days on the market are costing you serious money in terms of holding costs. Holding Costs are the costs incurred by owning this home. These costs include monthly utilities (gas, electric, water, etc.) mortgage payment, taxes, insurance, HOA fees, lawn maintenance, and anything else you pay to hang onto the house.
These costs add up quickly. Over-priced Sellers paid 5x as much in holding costs! Now that we’ve convinced you that getting the price right is important, let us explain our pricing strategy and methodology for you.
1. Hard Price Point: When a buyer is searching for property, the prices he/she uses are usually nice, round numbers, and many of the internet search tools out there only allow searches for pre-determined price ranges, which just so happen to also be nice, round numbers. For instance, a buyer may be pre-approved and looking for homes priced up to $400,000. $400,000 is what we would call a Hard Price Point. It’s a very round logical number that a buyer would set as a top or bottom price range.
2. Soft Price Point: A soft price point is a logical breaking point in a price range. It’s nice and round as well and delineates one price point from another, just not quite as definitively as a hard price point. Soft price points would be numbers like: $125k, $175k, $225k, $275k etc…When your home’s worth is not close enough to a hard price point, you’ll look for a soft price point to price it in.
3. Why the Price Point Matters: So let’s apply this to pricing your home. If your Home Value Report doesn’t give you a nice, clean hard or soft price point, you must find one that is close and makes sense. Let’s say your home’s value is determined to be $390,000 based on comparables and analysis. If you list your home right at $390k, it will show up in searches up to $400k, but you won’t show up in those searches that are looking for properties between $400k-$450k. For just $10k in list price, which is minor at this price point, twice as many people will view your property by pricing it at $400k. You see, at $400k even, you get those Buyers looking up to $400k as well as those Buyers looking from $400k-$450k. When you look at pricing like this, it seems foolish when you see Agents listing homes at $399,900 doesn’t it? For $100, they are missing out on at least double the online exposure, and most people don’t come to look at houses they have not seen online first.
4. Pick Your Competition: Once you know the range of the two price points your home’s value falls within, you can run searches with both of those price points to see what the homes for sale in your area look like in those price ranges. This is a competition so you are scouting your competition at this point. Be honest with yourself. Are these houses better than yours, more upgraded, bigger, smaller, in better or worse condition? If you were a buyer and were offered your house or their house at the same price, which would you select?
Rule of Thumb: Make sure that you are in the top 3 houses in a price point. If you are not, look at competition in the next price point down to see how you will compete with those homes.
Once you’ve found the hard or soft price point where you are confident you can take first, second or third place, you know you have chosen the correct price point for your home.
1. How Terrace 24 is Different: Please watch our video to see how our model is different from our competitors:
2. Advantages: You’ve just learned how to effectively price your home to maximize your returns. Of course, if this seems daunting or overwhelming, we are prepared to provide our professional opinion about correct price point for your home buy running a Home Value Report for you.
Going a step further: As part of our base listing package, you’ll be armed with the Home Value Report and you will have the opportunity to consult with one of our listing agents before going on the market. If after setting your own pricing or reviewing our Home Value Report, you are still unsure, our team of agents can talk you through the Home Value Report and get you comfortable with your pricing strategy before your listing goes live.
1. What We Recommend: Preparing your home for market is so much more than just making it look pretty for the buyers that come through. There is real science behind staging a house to sell and it begins with hiring a professional stager. A stager is a professional who does nothing but stage homes and studies what works and what doesn’t work. We highly recommend hiring a professional stager and offer the service of matching you up with one of our preferred stagers if you’d like some help.
2. Professional Stager: Many real estate agents will walk through your house at the listing appointment and make a few generic recommendations, but they are usually not as candid as they should be for fear of losing your listing. This really doesn’t help anyone. You need a pro to help you with this, not an agent who has seen a few HGTV shows or who is afraid to be honest. Regardless of how well your home is decorated, a staging consultation will be well worth the money. Don’t skimp here. The return on your investment manifests in a quicker, better offer.
On the same topic, the stager will have some great recommendations for things that need to be fixed or cleaned. We have an excellent directory of handymen that can take care of many of these items, along with all sorts of vendors to help prepare your home for sale.
1. First Impressions: The first impression of your home is made online. You literally have seconds to capture the attention of your prospective buyer. And where do buyers go first when they pull up a listing online? To the pictures!
The purpose of the pictures and the listing itself is to entice Buyers to take the time to come and tour your home. A bad online presentation decreases your chances of selling for the most amount of money in the least amount of time.
2. Consider a Professional: We recommend having a professional take your photos. Professional home photographers do this every day and have the skill and proper equipment to capture the rooms and features of a home for the best presentation online. Think this is a bunch of BS? Go grab your phone or digital camera and try to photograph your bathroom. How’d it turn out? Probably not well unless you have professional photography equipment and a great wide-angle lens. We can provide referrals to excellent photographers and will even set up the appointments for you if you like.