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6 Strategies for Pricing Your House…in Order of Worst to Best
Pricing a home for sale is as much an art as it is a science. While it needs to be based upon recent sales data, which is objective, there’s also a certain amount of gut feel that needs to go into it.
However, many homeowners lean into the gut feel aspects more than the data-driven methods. There’s no shortage of “creative” strategies out there, and homeowners have tried it all—usually with less-than-ideal results.
So to make sure you don’t fall into that trap, let’s take a look at 6 home pricing strategies, ranked from worst to best, to give you some perspective on the approach you should actually take:
1) Throwin’ Darts
Not sure where to start? Just grab a dartboard! Throw a few darts at random numbers, and presto—your home’s listing price is set. Well, at least that’s the way it seems some homeowners choose their list price…
While it might be one of the more fun ways to price a house, it’s probably the least accurate way to go about it.
2) Going to a Psychic
If anyone can define the perfect price, it should be someone who can see into your future, right? Just make sure you drop hints about the neighborhood “vibe” and recent sales; even the best psychics appreciate a nudge. And if they’re still not “seeing” the price you want to hear, just keep giving them some clues and direction until they tell you what you want to hear.
This approach is slightly better than throwing darts at a board, but not by much…
3) Adding up Your Costs
A common approach for sellers to take is to tally up how much money they have left on their mortgage, every dime they’ve ever spent on home improvements, the real estate agent’s commission. Once they have that total amount, they add however much profit they’d like to make onto it and, voila, that’s their listing price.
At least this approach is more objective and data driven! It’s still not even close to an accurate approach though. It doesn’t matter how much you owe, how much you’ve spent, or how much you want to walk away with. Your house will only sell for as much as the buyers in the market will be willing to pay for it, and they’re looking at the market value, not your remodeling costs from 2010.
4) Looking at Your Free Online Valuation
If it’s on the internet, it must be true… right? Checking out the “guesstimates” you can easily find online is something every homeowner likely does, but savvy sellers don’t put too much faith in them.
The websites that offer to give you the value of your home at least use data and algorithms – which is certainly more scientific than the previous three options – but they don’t factor in the unique details of your home or nuances of the current market.
5) Using the “Price Is Right” Trick
If you’re a contestant on the Price Is Right, bidding a dollar when you think everyone else is bidding higher than the value of the prize is a classic (and often winning) strategy. Technically speaking, listing your house for $1 could end up netting you the highest price possible! Pricing your house below market value will often generate multiple offers, which may even drive your selling price up beyond what you would have gotten by overpricing your house.
This is by far the best strategy on the list yet, but you probably don’t want to go to the extreme of losing your house for a single dollar. If you want to use this strategy, just list your house slightly below the actual market value instead.
6) Calling Your Local Agent
Finally, the most foolproof strategy of all: bring in an expert. A local real estate agent will price your home with a mix of data, market insight, and that gut instinct you’re looking for. It’s a science and an art—and one they’ve mastered so you don’t have to.