OK, so you’ve decided to sell your home, and you or your real estate agent have done your homework to see what price is fair compared to other homes like yours on the market (check out Part One for more details on that.)
Usually what happens is that agent will tell you they’ve looked at other properties that have sold recently in your area, and they’ve come up with a price range your listing price should fall in.
So how do you decide whether to try for the higher end or the lower end?
It all comes down to your personal goals and needs.
Here’s what we mean:
Say you’re getting a job transfer and you need to be in a new city in a month. You want to sell your house FAST. One of the best ways to do that is to choose a price tag that grabs attention. Usually that means to go as low as you can while still making the money you need for your next step.
Maybe you’re an empty-nester, and you’ve decided it’s time to downsize. But you’re in no particular hurry to move on to the next place. Perhaps that says you start off listing your home at the higher end of that price range, with the option to lower the price if you don’t get potential buyers in the door.
Or maybe you still owe $200,000 on your mortgage, and you MUST sell your house for that amount plus your cost of selling (broker fees, closing costs, etc.) in order to break even. That would certainly dictate listing at a specific price.
One more scenario: you own a hot property. Maybe a multi-family in a college neighborhood where investors look to acquire new properties. In this case, you can potentially drive up your profit by generating major excitement around the listing. It sounds counter-intuitive, but choosing to underprice your home almost always guarantees a LOT of attention. Hold an open house and require all offers to be due in immediately after. In our experience, this strategy can result in an ultimate sales price that WAY EXCEEDS your list price.
Bottom line: know YOUR bottom line before setting a price. It has to work for YOU.