Common Mistakes in Pricing Your Home in Rising Market
In a real estate market with rising prices, pricing your home can be a bit tricky. I meet some home sellers who think it is easier to price a home in a rising market, but that’s not necessarily true. The risk of mispricing is always the same, and leaving thousands of dollars on the table is at stake.
Prices are just starting to inch up around the country, but as usual, Boston real estate is a bit ahead in this regard. Many of Boston’s neighborhoods and immediate suburbs are enjoying visibly higher home prices for some months. And the vibrant market has encouraged many who’ve been waiting to sell.
So how much is your home worth now? In pricing your home, ensure you receive top dollar by avoiding the following common mistakes.
Looking at sold home prices online. Sold home prices are a great place to start your research on your home’s value, but there are some issues. Although the information is public and generally accurate, it can be misleading when using the mapping features of Zillow or Trulia. A house nearby of similar size could have sold for a vastly different price than what your home is worth. Unless you know a house well, it is dangerous to compare it to yours.
Furthermore, don’t confuse recent sold home prices with the “Zestimates” on Zillow. Those are generally useless in Newton and Brookline, and many parts of Boston. I’ve written about my reservations about Zillow as a data source before in my article, “No More Zestimates for Newton and Brookline.”
Pricing too high. You may think pricing a bit high in a rising market is not a big deal, but remember, we are just coming off a pretty ugly real estate slump. Market is just starting to perk-up, buyers still hold some cards. First-time home buyers are moving the market, and they are buying on a tight budget. There is less negotiation, so do not assume that if you price high, you’re leaving “room to negotiate.” Instead, you’re leaving room to sit on market and wait for an inevitable price reduction.
Pricing too low. Some real estate agents will tell you there is no danger in under pricing a home because there will be multiple offers, and you’ll get the full value of the home as buyers bid up the price. Bologna. Agents say this because a cheaper house is easier to sell. There is a strategy involved in multiple-offer situations, and it involves some thought.
Generating a multiple offer situation is never a guarantee, and can be risky when you are depending on the multiple offers to bring you the full value of the home. Here’s a post I wrote about the dangers of under pricing. A neighbor of one of my properties under-priced for a quick sale, and after the bidding war, the condo sold for about 10K short of top dollar.
Asking the wrong agent. Real estate is not neurology, but it does require expertise. This expertise is labor intensive, including looking at homes, meeting with buyers, writing offers, learning the market, reading the news, etc. Ask the wrong agent, and you’ll get the wrong answer. Speak with local agents who seem to know what they are talking about, preferably more than one if you have reservations. A competent agent will be able to give you a price or a price range, with some precision and confidence, and back it up with recent sales and inside knowledge.
Input from a professional will always be the best place for you to price your home. Make sure you don’t get caught up in the mistakes outlined, and you’ll sell your home for top dollar in no time.
If you are curious about how much your home is worth, click here.