This week’s Q&A column is sponsored and written by Hope Peele of The Peele Group and Corcoran McEnearney, the leading real estate firm in Alexandria. To learn more about this article and relevant Alexandria market news, contact The Peele Group at 703.244.6115 or email [email protected]. You may also submit your questions to Corcoran McEnearney via email for response in future columns.
Question: What’s the Best Strategy for Pricing Your Home?
Answer:
When it comes to selling your home, one of the most important factors will be choosing the right price. If you price it too high, buyers will head towards better value homes, and maybe not even visit your home. If you price it too low, you may be leaving money on the table. The goal is to get buyers to flock to the home and want to buy it. It’s a beautiful thing when there are multiple offers and buyers bid up! So what is the best strategy for pricing your home?
- Start with a CMA. The first step in price is to consult the experts. Your realtor will do a Comparative Market Analysis, a CMA. This data will show you what homes are on the market currently, what homes are Under Contract, Expired and Sold. It’s very important to focus mainly on the sold properties, as they are the true indicator of the market. While the prices of homes currently on the market are good to note, they have not sold, so they do not reflect what a buyer will pay. It’s also important to note that homes that are under contract have not sold yet, so we do not know if they got their list price or not. The CMA will take into account the square footage, the lot size, how many days the homes were on market and other factors. With some additional analysis, the CMA should let you know the condition and upgrades of the homes sold. This gives you a clear picture of what buyers are paying for, not what sellers are asking for.
- Keep Emotions of Pricing. It’s very important to use the data from the CMA and price your home accordingly. This can be difficult for some sellers, as you have built memories in the home. Buyers look at your home with fresh eyes, and consider the data very closely to determine whether this home fits in their budget and aligns with other sales prices, so don’t let your emotions guide the price.
- Use Strategic Price Points. When buyers are searching for homes, they typically search in specific price brackets. For instance, they may search for homes from $750,000-$800,000, even if they are willing to pay a little more for a home they love. So if the data is telling you that your home should be priced at or near $790,000, and you decide to price at $810,000, those buyers will never see the home. Just because you have an amazing yard or you just spent a lot of money fixing things or you think your home is the best in the neighborhood, buyers will not be swayed by those “feelings”. If you price it right, there is a stronger likelihood of getting lots of buyers looking, possibly multiple offers and maybe even that high price you are dreaming of.
- Look at the Competition. Your home will be compared to everything currently on the market, as well as those that have recently sold, so you should actively keep an eye on the current market. Ask your realtor to set up a report for you, so you see the other homes that are competition for your home. Put on your buying hat, and look at the photos and the prices and how it compares to your home. It’s important to know what’s out there, because buyers will just move on if they do not think your home is worth the price. Work with your Realtor to make sure that your home stands out.
- Never Overprice. Especially in this market, over pricing is never a good strategy. Some sellers want to over-price to leave room for negotiation.This often backfires, as overpriced homes tend to sit on the market longer and this makes buyers wonder if something’s wrong with the home. The longer your home sits on the market, the more likely it is that you will have to lower your price and oftentimes more than once. Data shows that homes that were initially overpriced tend to sell for lower than they would have if priced appropriately in the first place.
- Create Urgency with the Right Price. The goal in pricing your home is to create a sense of urgency. Going slightly lower than what the market dictates is in your best interest. Homes that are seen as a great value get lots of showings immediately, as buyers don’t want to miss the opportunity. Typically, aggressively priced homes have multiple offers and sell for higher, and sometimes MUCH higher than the list price.
- Adjust Quickly if Needed. The DC Metro area still has a strong, vibrant real estate market. If your home is not consistently getting showings and does not get any offers within the first few weeks, this is an indication that you have overpriced the home. It is very important that you adjust quickly rather than become a stale listing that sits on the market. The longer a listing sits, the more likely that buyers will think something is wrong with the home, and they will lose interest. If a buyer does come along, they are most likely going to insist on a much lower price, since the listing has been sitting for a long time. It’s important to keep the listing fresh and desirable, so listen to the market and adjust the price accordingly.
The Bottom Line! The best strategy for pricing your home is to work with a Realtor who knows your market inside and out, and to trust the data. A well-priced home doesn’t just sell faster, it sells for more money. When you align with the market instead of second guessing it, you put yourself in the best position for getting the most money for your home.
Hope Peele is a licensed real estate agent with Corcoran McEnearney in Alexandria, Virginia. She grew up in Old Town and currently lives in Del Ray. As a partner with The Peele Group, Hope is dedicated to guiding her clients successfully through the many-faceted process of buying or selling a home. Contact Hope at 703.244.6115.
If you would like a question answered in our weekly column or to set up an appointment with one of our associates, please email: [email protected] or call 703-549-9292.
Corcoran McEnearney, 109 S. Pitt Street, Alexandria, VA 22314, corcoranmce.com. Each office is independently owned and operated. Equal Housing Opportunity.
