Pricing your home as close to its fair market value as possible is advised. A real estate professional can help you calculate your home’s fair market value by taking existing market conditions into consideration and conducting a comparative market analysis.
Factors that would be taken into account in arriving at your home’s fair market value will also take into account features which set your home apart from others on the market or in the area – swimming pool, added bathrooms, an upgraded kitchen, in-law suite…
From our experience with pricing homes we can tell you that:
- Pricing your home incorrectly is one of the biggest mistakes you can make – price it too low, you’ll lose out on profits; price it too high, and you will scare away potential buyers.
- If you are receiving extremely low offers, you’ve probably priced your home too high.
- The home’s location and condition will play important roles in its pricing.
- Typically a home receives the most interest/activity within the first 3 weeks of being listed.
- While certain agents feel that overstating a home’s value can help, when you reduce the price at a later stage, you lose the competitive edge.
We learned early on in our careers what pricing a home incorrectly can do. Compared to neighbourhood standards, the home in question was luxurious. The owner had spent a fortune on the home and decided on an asking price of $425,000 – about $50,000 more than what one would expect to pay for a home in the area.
Buyers weren’t able to appreciate that the home had over $75,000 in renovations in the last year alone, and the seller, insisting that he’d spent a fair amount of money towards the home, was unwilling to drop his price or accept a lower offer. The result – by the time the seller realized his folly and got the price down to $375,000, all potential buyers had lost interest and his home sat on the market for over a year.