When selling a house, setting the right asking price is critical. If you price your house too high, prospective buyers might not bother to look at it. You could lower the price later, but buyers might have already set their sights on other homes. Sometimes your best bet is to choose a list price below the asking prices for comparable homes in your area.
Dangers of Overpricing a House
It’s natural to want to get as much money as you can for your home, but setting an asking price too high can backfire. You might attract few interested parties, or possibly none, if your price is out of line with the rest of the local market. Even if someone is willing to pay your asking price, a lender may not approve a large enough mortgage if the appraised value is lower than your asking price.
If you set the price too high and don’t attract a buyer, your house may linger on the market for weeks or months and stop appealing to prospective buyers. People tend to assume that a house that’s slow to sell has something seriously wrong with it and often decide to focus on other houses rather than request additional information.
How to Determine Your Home’s Value
Your real estate agent can perform a comparative market analysis and compare your home to others in the area that are similar in terms of age, size and amenities. That can provide a good starting point to set an appropriate asking price.
Houses that seem similar in many respects may have different values for several reasons. Homes in the same neighborhood may vary widely in terms of price because of their different ages and features, and similar houses in different neighborhoods can have vastly different prices because of their location, proximity to businesses and the quality of local schools.
You can also have your house professionally appraised. An appraiser will be able to take everything about your home into account and come up with an accurate assessment of its value in the current real estate climate.
Reasons to Consider a Low List Price
The first few weeks after you put your home on the market are when you’ll be most likely to attract prospective buyers. If you list your home at a relatively low price, you’ll probably stand out among your competition and receive several offers. That could result in a bidding war that might ultimately drive the final sale price up to, or even above, the typical market price for a house comparable to yours. If you need to close quickly for some reason, setting a low asking price also can help you speed up the process of selling your home.
Choose the Right List Price
Sometimes asking for less than your home is worth is the best way to sell it quickly at a good price. Talk to your real estate agent about how your home’s value compares to others in the area and decide on the best list price.