Selling my home > Pricing your home Seller's checklist Arranging your move Buying again Arranging the sale Pricing your home Cancelling your home loan   How do I price my home? Does an agent's pricing count? Ask yourself these questions when pricing your property Which of the three pricing categories is most accurate? How quickly will an overpriced house sell? What principles are used to evaluate property? What leads to overpricing? When is buyer interest the greatest? What are the benefits of proper pricing? How do I price my home? You should always price your home correctly so that it sells. This means you should price it within the market range - because you want the fastest possible sale at the highest possible price. This is known as priced to sell. When people's homes do not sell, they often ask: What is wrong with my house? Why did nobody make an offer? Many homes that are put on the market never sell because the price at which they are marketed is an "out of reach" price. The only way to arrive at the correct selling price is to study the prices of the properties sold in your area. The value of a home is determined by what a willing buyer will pay a willing seller. The length of time a house is on the market affects the price. If a house is overpriced initially, then it has a good chance of selling below market price. This means that by the time the price is reduced to a fair and reasonable selling price, it has become over exposed and has begun to raise questions in buyers' minds. Sellers may suggest that their home be marketed at a higher price to see what happens. This is a dangerous practice because the right buyers may not be attracted, and the buyer must see the home before he can make an offer. Back to top Does an agent's pricing count? Never choose an agent based on price. The agent has no control over the market, only over the marketing plan. Base your selection of an agent on the competence of the person and the services provided. Don't allow or encourage agents to bid up the price in order to get your mandate. Back to top Ask yourself these questions when pricing your property Am I selecting an agent on services or product? Is the local market rising, falling or staying even? Is my opinion of value based on actual neighborhood sales prices? How many homes in this area are competing with mine right now? How does mine compare? Have neighboring homes been on the market too long? Is my home consistent with homes in the surrounding area? What improvements have I made that will increase the value? Are my financial needs influencing my asking price? Am I willing to price right and stand firm? Back to top Which of the three pricing categories is most accurate? Expired These are the homes that are put onto the market but which never sell. They become expired listings because the prices at which these homes were marketed represent the "out of reach" price. If you price your home out of the marketer's reach, it will also become an expired listing. For sale A for sale price is an asking price only. These prices have not been obtained in the market place and are, therefore, no reflection of what the market is willing to pay. Sellers often erroneously arrive at an asking price for their home based on those they read in the newspaper and which their neighbors are asking, rather than by making a study of comparative sold prices. Sold these are the actual selling prices and are your best guide on which to base your pricing decision. Assuming the homes are similar to yours, you should be able to attain a similar price. Back to top How quickly will an overpriced house sell? Prices in the real estate market rise and fall over time. In a flat or declining market, correct pricing is critical since the market won't absorb an overpriced house within a reasonable time. The result is that the longer an overpriced house is on the market, the less likely it is that the seller will get his asking price. By the time an overpriced home is finally sellable, it may be too over-exposed for buyers to offer the full price. An overpriced home will often sell at below market value simply because of an initial inflated price. Likewise, a house that is put on the market at fair market value, will often sell at well above market value - simply because it was priced to sell and drew great interest from buyers. Back to top What principles are used to evaluate property? Cost This is the amount you actually paid for a property plus any capital improvements you have made since the purchase. Price This is the stated amount a seller is willing to accept for a property. Value This is the amount a buyer is willing to pay - given a certain set of circumstances. Market value This is the amount that will bring a sale between a willing buyer and a willing seller. It is based on the history of similar properties recently sold in the area. Regression and progression These terms describe the effect surrounding home sizes have on the value of a property. Regression is the decrease in value when surrounded by smaller homes. Progression is the increase when surrounded by larger homes. Substitution Substitution refers to the actual value of your premises. Value is determined not by the cost invested in a property, but by the value derived from it. This means that value is determined by what a purchaser gets out of a house, not what an owner has in it. Back to top What leads to overpricing? Over-improvement or over capitalization Improvements should be made for enjoyment, not only resale. You cannot add an item to a house, use it, then expect a buyer to pay the original cost. Need A seller might need more money - but the value of the house stays the same. Buying in a high-priced area Values are specific to location. High values in the area do not necessarily increase the value of your home. Original purchase price high If you bought in an up-market and are selling in a down-market, you need to adjust your price accordingly. It is not that you overpaid, but simply that the market has experienced subsequent change. Lack of factual data Base your opinion of value on recent documented sold prices. Bargaining room By building in bargaining room you may cut out buyers. A buyer can only make an offer on a house, once he has seen it. Buyers may offer low, but they will do that at any price. It is easier to negotiate a buyer up to fair market value, than to an inflated price. Back to top When is buyer interest the greatest? Most buyer activity on a new listing occurs in the early period of marketing. This happens because estate agents maintain a list of active buyers. When a home is newly listed, the agents arrange for these buyers to see the property. Once this active group has seen the property, showing activity decreases to only those buyers new to the market. For this reason, it is important that sellers have their home in the best condition and at the best price for initial exposure to the market. Remember, you have only one chance to make a first impression! Back to top What are the benefits of proper pricing? Faster sale When your home sells faster, you are in a financial position to buy your new home sooner and to negotiate from a position of strength. You are spared having to submit an offer on your new home subject to the condition that your existing home sells within a specific period. Less inconvenience Proper pricing reduces the inconvenience of show days. Exposure to more buyers At market value, you open your home to more people who can afford the price. In other words, you broaden your buyer base. Increased estate agent response When estate agents are excited about a well-priced listing, they make a special effort in their marketing programme. Better response from advertising and boards Newspaper adverts and boards turn into appointments when price is not a deterrent. Higher offers When a home is priced right, buyers are less likely to submit a low offer out of fear of losing a good buy. More money to you Because buyers buy by comparison, a well-priced house: Generates excitement in the market place is perceived to be the best value for money Produces a higher selling price Back to top   Disclaimer | Conditions of access | Privacy and security statement