Ineffective pricing is a primary reason why homes do not sell. If a home is listed above fair market value, it won’t get showings; and with few showings it’s not likely to be sold. The seller must see their home from the perspective of a potential buyer and realize it is only worth what someone else is willing to pay for it.
A key aspect of pricing a home effectively is to price it fairly at the beginning of a listing. Sellers run a risk when having their home on the market for an extended period of time, since the bulk of buyers will show interest when a home is first put on the market. If the asking price is initially too high and the home doesn’t sell, potential buyers down the line may wonder why no one wanted the house months earlier.
If, however, a home sells at an above market price and the comparable sales for the last six months and current market conditions do not support the price, the house may not appraise and the sale could fall through. The buyer and seller can renegotiate the price, but there is always a possibility the house will go back on the market.
The best way to ensure your home is priced effectively is to look at current market statistics. Many Realtors do a comparative market analysis (CMA) to analyze homes that have sold, are pending and are active on the market within the last three to six months. Comparing square footage, number of bedrooms, lot size, year built, amenities and several other factors, will help determine a realistic price range.
Research put out by Prudential Ambassador Real Estate shows homes priced within fair market value are likely to attract 60 percent of buyers. The same study also shows that homes priced just 5 percent above the fair market value only attract 30 percent of perspective buyers and homes at 10 percent above only attract 2 percent. Even a small percentage over the fair asking price can cut the chances of selling a home in half.
It’s often difficult for sellers to value their home because they don’t have experience looking at the market. A Realtor will be able to help sellers effectively price their home to make it marketable to potential buyers. Again, a home is only worth what a prospective buyer will pay for it.