Instances Where It Can Be More Beneficial to Underprice Your Home
The demand of buyers is seemingly dampening due to a variety of economic factors, and sellers are starting to ask themselves how they should proceed with pricing their homes. If you price too low, you are leaving money behind, and if you go too high, buyers won’t be interested in looking. If, like many, you find it personally difficult to choose the best price for your property, we’ve got you covered.
In this article, we will uncover three pricing options that, as a seller, you should be considering when selling your home.
1. List your Property Below the Market Value
When Might Pricing my Property Below the Market Value Work in my Favor?
Listing below the market value is a smart strategy for you, even though it might seem like the wrong decision for your bank account. In different situations, it can garner more money in your pocket if you find the right starting price and if the market is in favorable conditions. The below scenarios can help you to determine if selling in that type of environment is ideal:
- You are Listing in a Seller’s Market
A seller’s market will happen when the home inventory is lower, and the competition is at an all-time high. When pricing your home at a lower price, your listing will stand out among the others. This will garner attention from buyers, who will submit tons of bids to compete and win the house as one of the highest bidders.
- Your Home Needs to Sell Quickly
If you need to get your home sold and move quickly due to a life-changing event such as a job relocation, moving into a better school district, or relocating closer to family members, your main concern should be directed at timing versus the state of the market. Lowering the price of your property is better than letting the house sit on the market when you don’t live in the same area any longer, or you need the money from the sale.
- You Want Buyers to Be Attracted to Your Luxury Property
Due to all the extra amenities and the sheer size, luxury homes typically run higher in price. However, when cross-compared to different choices, a house can get lost and linger longer on the market than ideal. A certain price range will attract a limited number of potential buyers, a lower price is a way that you can expand the buyer pool.
2. List Your Property Above the Market Value
When Might Pricing my Property Above the Market Value Work in my Favor?
When deciding to list your home above market value, there are indications that the market might support this way of thinking. Unless the buyer has fallen in love with the house, many won’t want to voluntarily pay for more. Even if they are willing, there is still a certain limit to what buyers can afford, and you mustn’t overprice the property. Here are a few reasons when it will make sense to list your property above market:
- You are Listing in a Seller’s Market
When you list in a seller’s market, you will have more leeway when pricing higher. The market is seller-friendly, with a housing shortage and a reluctance for ultra-low mortgage rates to be given up. Another great indicator that you are listing in a seller’s market is when there is a decline in price reductions, and the seller’s market action index is higher, where most properties are receiving plenty of competitive offers.
- The Property You are Selling is in Demand
If your listed property is one of the rare that is being sold in a highly coveted location, like a waterfront, in a top-rated school district, or close to desirable amenities, buyers will typically expect to pay a high price.
- If the Housing Inventory is Low, You Want More Money
If the seller’s market is actively low, it makes the few houses for sale stand out, especially if the interest rates are low. Take advantage of a situation and pricing above the market value; buyers are attracted to locking in a lower interest rate.
3. List Your Property at Market Value
When Might Pricing my Property at Market Value Work in my Favor?
Tons of people tend to price too low or too high, which can make the seller look like they are desperate or unrealistic. Finding the sweet middle spot will give your property a moment to stand out among all the others by not being overpriced or underpriced. Here are a few reasons when it will make sense to list your property at market value:
- You are Listing in a Normal Market
Homes sell all the time as people are constantly moving and looking for new places to relocate. If the market does not fall under a seller’s or buyer’s market, there is typically no significant competition on either side, but that does not always mean that homes still aren’t required to have.
- You Aren’t Interested in a Big Price Reduction of Your Property
If your home is priced at normal market value, you typically won’t require a major price reduction when compared to someone who will go above the normal market value and have to reduce to draw in prospective buyers.
- Your Price Range is Too Crowded with Different Homes
If all the other houses that are similar to your property are priced the same, when potential buyers are doing an online search, your property will end up being part of a long list with other homes in similar price ranges.
Bottom Line
Pricing your home in the correct range is one of the most important decisions that you can make to ensure a smooth sailing sale. We always recommend working closely with a trusted real estate agent of your choice to better your chances of selling your home, only to turn around and find the new home of your dreams.