Home Pricing - Avoid These Mistakes

Home pricing is an art, but fortunately there is a little bit of science to it as well. As in many areas of life, learning what not to do when pricing a home is an important part of doing it right. Here are some of the common mistakes sellers make, which are easily avoided.

Home Pricing Mistake - Doing No Research

Think you can really just guess what your home should sell for? Guess again! Unless you are an active real estate agent you are almost certain to price it too high or too low. Even a real estate agent doesn't guess. She does a market analysis, using many of the same techniques as a professional appraiser.

Learn how to do this if you are going to try pricing the home on your own. It is a subject of its own, but essentially you find similar homes in your area that have recently sold, and compare yours to them. Then you adjust their prices up or down according to the differences and take an average. How much more would that home have sold for if it had your extra-large garage? You can see why you might need help with this part. You need to at least do some research.

Home Pricing Mistake - Pricing Too High

I don't even have to cover pricing too low. The problem with that is obvious. But many people think that they can put a high price on a home in case someone with a lot of money comes along. "I can always drop the price later," the thinking goes. This strategy might work if you have no deadline for selling. On the other hand, I know of at least one case where a seller lost tens of thousands of dollars by over-pricing his home.

How do you lose when you price too high? To begin with, all the costs of selling the home, from an appraisal to the advertising you do are lost during the time that the home sits there unsold. Yes, you can lower the price later, but you may need a new appraisal, and certainly new advertising.

You might have holding costs if you are not in the home, like taxes, insurance, utilities, etc. If you sell a year later than you would have, you never get this money back. In addition, you might sell for less, because the perfect buyer passed on your house while it was priced too high. Pricing it right at the start is almost always the way to make the most from the sale.

Other Home Pricing Mistakes

Thinking it matters what you think is perhaps the most common mistake. You think your new basement bar and billiards room is worth the $15,000 you spent on it? Who cares! If the buyers think it adds $5,000 to the value of the house, that's what it's worth. You live in YOUR house, but you sell a person THEIR house, so if you overspent on that pink living room, accept the fact and move on. Pricing is about what the market thinks.

Don't make the mistake of telling your agent how low you'll go. Research has confirmed that agents already typically sell too low just to make a sale. Yes, the agent is supposed to try to get the highest price for you, but his real interest is in getting that commission fast. If he takes an extra two months and spends an extra $300 on advertising to get $5,000 more for you, he make just $300 more on the commission (nothing more if we take the extra advertising into effect). He just wants a fast sale, and then another...

Avoid these home pricing mistakes and you'll get the most you can in the quickest time.