When a house has been sitting on the market for too long, the price begins to drop. Buyers will think there’s a reason that no one is buying it, and they won’t add it to their list of houses they want to see. In fact, web traffic to a listing slows down by 65% after the first three days, according to a study from Redfin.
That’s why it’s so important to make a good first impression with your listing price. If a house is overpriced, buyers won’t give it a second thought. But you don’t want to set the price too low and lose money either. Here are a few tips to help you find the right price for your home.
Don’t Drop The Price
A home that comes on the market at $249,000 looks a lot different than one that was on the market for $350,000 for a while before being reduced to $250,000. Buyers will question why the seller dropped the price so much. Were they trying to trick buyers into paying more than the property is really worth? Does the seller know what the actual price should be? Will the seller drop the price even lower if buyers wait?
Lowering your price might attract some buyers, but not nearly as many as if you had just set that price, to begin with. In fact, houses that have price drops only get about half as many views online as new listings, according to Redfin.
“Even if it’s objectively a good home, if it’s been on the market for a while, many buyers will wonder if there’s something wrong with it. Once that stigma is there, it is going to be hard for a seller to get full asking price,” a Redfin agent said in the study. “If there’s already a price cut, savvy buyers start smelling blood in the water. It’s not a good situation for sellers to be in.”
Think of it this way: if you are willing to reduce the price after it’s been sitting on the market for a certain number of days, just make that reduced price the initial price. Buyers have a lot of tools available to them these days, and they can see when you are overinflating the price of a house.
Start A Bidding War
On the other hand, if a home comes on the market at a low enough price, it can attract more buyers. Those buyers might grow attached to the property and start a bidding war. In the best-case scenario, buyers can actually increase the price of a home beyond what you ever thought you could get out of it.
However, setting the price below what you are comfortable selling it at could come back to bite you if you end up losing money on the sale. So make sure you feel comfortable with the price you set.
Leave Some Wiggle Room
Most buyers will want to negotiate the price even if they are already comfortable with where it is now. If you set the price $5,000 – $10,000 higher than you want to go, you can allow the buyer to “win one,” which goes a long way.
Think of it this way: would you rather buy a house that was priced at $250,000 and you were able to haggle the price down to $240,000, or a house that was originally priced at $240,000? Even though both houses turned out to be the same price, most people would feel like they saved money by haggling, even if it’s only a small percentage of the final sale price.
Price For Search Ranges
Many buyers shop for houses online or through apps that allow them to set a price range. So they won’t be able to see houses that are just out of their range, even if it’s only by one dollar. That’s why it’s important to set your price within common ranges. Most of the time these ranges are between big round numbers, like $100,000 – $200,000, or $250,000 – $299,999. You’ll only be shooting yourself in the foot by setting your price at $301,000 instead of $299,000.
Setting your price below one of these big round numbers puts you in a buyer’s price range, plus it makes the price seem a lot lower than it actually is. There’s a reason songs on iTunes are only 99 cents, it’s easy to justify spending less than a dollar on a song (even if it’s only a penny less than a dollar).
Talk To A Real Estate Agent
The best way to find the true market value of your house is by simply asking a real estate agent. They know the market conditions and how much buyers will be willing to spend on your house. Even if you’re not fully sure you want to sell yet, you can call up your local realtor and ask them how much your house would be worth if you did decide to put it on the market. You might be surprised how much they say your home is worth.