Use These 3 Strategies To Correctly Price Your House When Selling
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How do you correctly price your house when you are selling without a Realtor?
Watch this video below to find out my 3 pricing strategies that you can use to successfully sell your house or read the transcript below.
When you sell your house, either with or without a realtor, you will need to have a pricing strategy and not just a listing price.
This is a common mistake that most FSBO’s make.
After all, I always say that the best form of marketing a home is an appropriate price.
That’s why it’s important to spend some time and think about a pricing strategy before listing your house for sale.
You don’t want to be arrogant and think you have it all figured out and then end up not selling your home!
You Choose Price, the Market Determines Value
Keep this next point in mind when pricing your house.
Nobody cares what price you want for your house or how much you need to sell your house for.
And the listing price of your home doesn’t EVER determine the selling price of your home.
The buyers in todays market only care what they think the house is worth and what they are willing to pay for it.
And the listing price you choose, only determines how long you have to wait to get the price the market would have given you anyway.
So remember that point and think about the buyers perspective and you will be positioning yourself for success.
Listing Price is Marketing a Home
Ok, so when I say that an appropriate price is the best form of marketing, I say that because of the whole point of marketing your house for sale is to get people interested in your home.
I can best explain how this works with this graphic, which is the relationship to your listing price to the number of current buyers who will come and look at your house.
This is a graphic that has been around for a long time and still holds true.
Most good real estate agents will show you this graphic when selling you on their services because it is an important concept to understand.
So lets take a look at it in detail.
First on the left hand side, you have the asking price that you choose to list your home for sale.
And if you go up in price or down in price.
The middle is the sweet spot of what your house is worth in todays market.
Remember, this isn’t necessarily the number you think it’s worth but the number the market thinks your home is worth.
Next, on the right hand side, we have the percentage of ACTIVE buyers who will come and look at your property based on the price you choose to list it at.
When you choose an appropriate list price, at market value, you can expect about 60% of ACTIVE buyers to come see your home.
As you can see, when you go up in price, the number of buyers who will setup showings dramatically decreases.
And when you go down in price, the number of buyers who will setup showings dramatically increases.
This is why an appropriate price is the best form of marketing.
Because you get MAXIMUM exposure!
Real estate agents know that when you list your house in the MLS with an appropriate price, you will most like sell your home.
Real estate agents also know that when you list your house in the MLS with a price that is too high, you will most likely have to reduce your price in order to get your home sold.
And you have lost out on the most critical time to sell your home.
Which is the first 30 days.
Check out, sell your house fast and get more money for a deep dive into that topic.
Choosing a Pricing Strategy When Selling a House
So, given that information, what are some pricing strategies?
Really there are 3 options you have when it comes to price and a strategy with each option.
- Price High
- Price at Market Value
- Price Low
Pricing High Strategy
First, lets talk about pricing high strategy.
This is my least recommended option.
Given what I just explained about getting maximum exposure with an appropriate price, this obviously has disadvantages.
When you price high, you don’t get maximum exposure.
Which is the exact opposite of what you want to do.
However, pricing high can have it’s place.
For example, in an rapidly appreciating market.
In this type of market, house prices are going up and fast.
This means the market will catch up to what you are asking for your house.
But chances are, this is not the case for your situation.
The other way pricing high could make sense, is if your house is so unique that a buyer is willing to pay a premium.
But don’t confuse having a remodeled kitchen or other improvements as unique.
When I say unique, I mean something like the only approved horse property in town or something like that.
If you decide to price high and are not selling it’s best to have a contingency plan in place.
The best option is doing 5 or even 10 thousand dollar price adjustments every 2 weeks until you are getting both showings and offers.
Then you know you hit the sweet spot.
Again, I don’t recommend pricing high but you are in control of your pricing decisions.
Pricing at Market Value Strategy
Next, lets talk about the pricing at market value strategy.
This is what the majority of sellers should do.
After all, buyers today are informed and have information at their fingertips to understand house values.
They will know if you are priced appropriately.
And if these buyers like the features your home has to offer they will absolutely come and see it.
The more people who come and see your home the better chances you have in getting an offer.
Or even multiple offers.
Going back to our pyramid, you can see that pricing your home at market value will get about 60% of active buyers to come and see your home.
This is what you want when you put your home on the market, correct?
If so, why would you even consider over pricing your home?
It just seems so simple to me and hopefully to you too!
Now sometimes, you might think you priced your home at market value but you are not getting any offers.
Before you make a price correction, you should consider the other parts of your listing.
Mostly how it looks both in person and online.
For example, did you order professional photos?
And does your home look it’s absolute best?
What has the feedback been from the showings you did have on your home?
If you end up ruling out everything except price, then you know what you need to do.
Make a 5 thousand or 10 thousand price correction and see if that helps the sale of your home.
Pricing Low Strategy
Now at this point you should probably be thinking…
What if I think I priced my home correctly but it’s actually underpriced?
Well that leads into the 3rd pricing strategy, pricing your home low.
This strategy is not for everyone.
But it should be!
I love this strategy because I know it works.
And going back to our graphic, you can see that the number of buyers to come see your house increases, when you price low.
I’m not saying you should underprice your home by a lot but slightly underpricing by say 5%, will have quite an effect on the market.
This is because everyone loves a deal and it sparks a sense of urgency in buyers because they don’t want to miss out.
In my experience, when you slightly underprice a home AND make it look its best both in person and online in the MLS, you will almost certainly attract multiple offers and sell for more money then you would have any other way.
Again, this is because you turned the tables on buyers and made them make emotional offers because they wanted your house and knew that if they didn’t put their best foot forward right away, then they would lose out.
I see it all the time when savvy home sellers utilize this strategy.
But I understand this strategy is not for everyone.
It takes some time to wrap your head around it.
But you should consider it.
There you have it.
3 pricing strategies you can use to successfully sell your house by owner.
I highly recommend either pricing your house at market value or even slightly under for best results.
After all, when you purchase one of our flat fee mls listing plans, I don’t just want you to list your house but I want you to actually sell your house.
Be sure to check out, the Magic Formula to Sell Your House On Your Own in order to understand the important things to focus on when selling your house and ignore all the other noise that will distract you from focusing on what is important.
Hopefully you are now better prepared on what your pricing strategy will be when you list your house for sale on the MLS.
About the Author: Kris Lippi is the owner of ISoldMyHouse.com and the broker of Get LISTED Realty. He actively writes about real estate related topics such as buying and selling homes, how-to guides for around the house and home product recommendations. He has been featured in Inman, Readers Digest, American Express, Fit Small Business, Policy Genius, Lending Tree, GoDaddy, Manta as well as other major websites. Read more about us here.