“Something is worth what someone else is willing to pay for it.” It’s an old saying that, while on the surface might seem true, isn’t always the case- especially in real estate. Setting the list price for a home isn’t just about trying to predict the home’s worth in the current market, but it’s also about balancing buyer interest with buyer concern, managing expectations while also enticing them to learn more. Just like a good listing photo, choosing the right price can be the difference between a homes that sits on the market for months- or having a line of potential buyers trying to get in for the open house.
Finding the right price isn’t always easy: too high and too low can both be problematic. There are several “tipping points”, where listing price leaves that Goldilocks sweet spot, and starts to venture into areas where buyers might start to raise a few red flags. For as many factors that impact the value of a home… there even more factors that will impact a potential buyer’s perception of your home based on the price.
One such tipping point is a home that’s perceived as being priced low. Buyers might ask themselves what’s wrong with the property, and could suspect issues beneath the surface. Not only could this drive away potential buyers, but it could put you in an even worse conundrum: if someone does take the hook and make an offer, you might find yourself having to negotiate the price even further down: which means you’re selling your home for much less than it’s truly worth, leaving thousands on the table. At the end of the day: a lower price doesn’t always mean more interest in the property. In some cases, it can actually decrease demand.
The opposite tipping point is setting your price so high that it discourages buyers from even taking a look. Less interest means fewer offers- which puts you in a disadvantageous position for negotiation. If you don’t get an offer, your home will sit on the market. While you could lower the price later down the road, buyers may be hesitant and become skeptical: Why would this house be on the market for so long, unless there’s something wrong with it? There are other negative aspects that a high price could contribute to. Consider this: if you’re asking $25k more than another comparable home in your area, then that other home, by virtue of appearing to be a “better deal” than yours, will see the increase in attention and not your own home. Don’t sell someone else’s home for them by pricing yours too high.
Choosing the right listing price isn’t just about getting paid what it’s worth: it’s about marketing your home to the right buyers and giving them the confidence to look at your home and seriously consider it. While there’s no definitive science to finding the perfect listing price, you’ll want to work with an experienced realtor who understands the current market, and can help you find those tipping points and avoid them!
