Pricing your home in a buyer’s market can be challenging and often stressful. Often this is the hardest part of being a Realtor in a down market is helping my clients understand what it will take to sell their home with as little stress as possible. Here are some tips for helping you:
Do you really need to sell? As simple as it sounds but it is often over looked. Do you have to sell in a down market, or can you wait until the market rebounds? If you can wait, and sell when the market is improving, you will sell faster and for a higher ask price. Just a simple question to ask before going too far.
Learn what the local market is doing. When I say local market, I’m not really speaking of city level, but a smaller area. Often when you talk to a Realtor about selling, they will over a Competitive Market Analysis or an opinion of what your home is worth. Ask them how they achieved that number and you should learn about your local market. They should also be able to tell you the Average Days on Market of a Listing, which tells you on average how long it takes a home to sell from when it is first listed. How many homes are currently for sale (inventory level) and the absorption rate (how long will it take before those homes are all bought).
Complete repairs and maintenance. Often in a buyer’s market, buyers are not going to want to do much work before moving in. They want a home that is move-in ready or also called turn-key. This is because there are so many homes to choose from that they will just keep looking until they find the home that they can move right into. In other words, don’t over an allowance to replace some bad carpeting, pick a neutral one and replace it, this will appeal to your buyers better than bad carpeting with an incentive.
Set the price right up front, don’t chase the market. Okay, so you’re now aware of the market, you’ve done some research. Well, you still have some more work to do. Figure out what your carrying costs are, how much does it cost to stay in your current home each month (mortgage payments and utilities are the biggest ones). Now take that number and divide it by 30 (days in the month average), this is your daily charing costs. Now remember that Average Days on Market from the Realtor, multiply that to your last result. If your listing price is average, that is the amount of money you spent waiting for the buyer to arrive. So now you can subtract this carrying cost from the price that you have and now you have a discount to move sooner.
Well, that’s not all, usually when homes are on the market, they have price reductions, typically 1% price reduction for every month on the market, so if you want to sell faster, you should also take that into consideration.
Find a good Realtor. Statistically speaking, Realtors help sellers achieve the highest price in the shortest amount of time. Remember, they are a professional and you have to work with them for quite a while on a very large financial transaction, so ask them questions. Make sure that you work well together. Ask them about past performance, List Price to Sale Price ratios. How they would market your home. Don’t leave any questions unasked.
Consider Incentives. Consider your target buyer. If you are offering an entry level home, your buyer may struggle to qualify for a loan, you can offer closing costs, points or even financing to them. If they are a middle home buyer, you could offer to pay a year’s worth of HOA dues, Home Warranties, or a Gift Certificate to a furniture store. If you have a high end home, think luxury, a trip to Hawaii, membership to a club or even a car.
There is so much you can do beyond the traditional marketing to help sell your home, but the biggest thing is price your home correctly in the first place. This gets the buyers in the door to see your home. Then you have to offer a great value (no worries of repairs or maintenance), and then you want to get them sold with a little something (an incentive). A good Realtor will help you with all of this.