Selling a Nashville home is almost always a good thing - it means moving on to a property with better space, finally getting that dream house, and maybe even making a lot of money in the process. When it comes time to decide to sell, estimating how much profit you can make typically has a large influence over the asking price that's determined. Yet, the concepts of asking price and selling price can be more complex than just picking a number. Let's find out why.
Additionally, it's crucial to get the pricing just right when you're selling your home. Pricing your home too high or too low can result in lost profits and delays during the home selling process. Knowing how to get the price just right can help ensure that you'll have a good home selling experience. If you're a homeowner who is thinking about selling your property, here's what you need to know.
Creating A Plan
The asking price of a home is more important than people might realize; not only does it determine a baseline for who might be interested in the home, but more importantly, it sends a message about the home's value and worth. Also referred to as the listing price, this number should be carefully calculated to have a successful sale.
Pricing: It's All About the Comparables
Your home is worth the highest price the market is willing to pay. Without a crystal ball, how can homeowners know that the market will bear? Real estate agents use comparable homes to advise clients on a fair list price for their homes. A comparable home will have the similar square footage, age, lot size, and amenities and will have the same number of bedrooms and bathrooms.
Here's what an agent will look for when determining the optimal price for your home:
- Sales of recent homes in the area. Recent sales of similar homes in size, amenities, and community provide important information about the housing market. The market changes quickly and frequently, so evaluating recent sales is an excellent way to gain information about the highest prices the current market will bear.
- Homes for sale in the area that have not sold. Real estate agents gain valuable information from these statistics. Why did these homes, similar to yours, not sell? Was the price tag simply too high? Were there other factors involved?
- Recent sales over older sales. Sale prices from the past three months are more informative than sales from last year. Your neighbor may have gotten a great price on their home last year; it bears little influence on the current market.
- The sale price over the list price of sold homes. Anyone can list their home for any price. It is the sale price of comparable homes that should inform your decisions.
So how exactly does one create an accurate asking price? Usually, homeowners work with a real estate agent to talk about their desires and develop a rough idea of a number. The agent will then pull information from the neighborhood to see what similar homes have sold in the recent past. They will also examine what's currently on the market and create an analysis of what's trending in any market, be it Gallatin or elsewhere.
Taking past sales into account is an excellent way to gauge market conditions. Homebuyers will almost always use sold data when coming up with an offer, so always be one step ahead and know what comparable homes are not only listing for but actually selling for as well.
Called comparables, or comps, this is a great way to understand how much a home could realistically sell for, but homeowners should be aware that it's not a guarantee. An asking price is just that - the number you're asking for but not requiring. It sets the stage for negotiations to occur, and sometimes buyers might come in with a number that's higher or lower than asking.
Also, keep in mind that negotiations are an inevitability. Few sellers go into the home selling process wanting to take less than the original asking price. But depending on market conditions and what you're selling, buyers will almost always offer under the list price. Should this scenario play out, don't get discouraged, and anticipate this might happen when initially pricing your home. Just be careful not to substantially overprice it for the sole purpose of leaving room to negotiate.
Evaluating The Selling Price
Some homeowners are shocked to learn that their home's selling price ended up being far off the mark from their asking price. Assuming the real estate agent completed an accurate evaluation and came up with an appropriate list price, there could be several reasons a home could sell at a lower figure.
Sellers are often in a rush to complete the transaction and move on to their next home, so if a house has been on the market for a long time without an offer, they might be inclined to take the first person that comes through the door. If this number is low, they might say yes anyway.
Other external factors can contribute to a low selling price too. The asking price might have been too high for the particular neighborhood, and buyers found better values elsewhere. Or, there might be nothing wrong with your home at all, but the neighbor's yard was a messy turnoff.
How to Price Your Home Right
The best way to price a home properly is to work with a real estate professional. A good real estate professional will compare your home to other homes in your neighborhood. Based on the prices of comparable homes, your real estate agent will be able to choose a price that is not too high or too low.
Home sellers need to listen to their real estate professionals when choosing a price. Home sellers that choose a price against the recommendations of the real estate professional may have a hard time selling their home. Those that can get a fast offer may end up selling their home for far less than it is worth.
The Dangers of Under- or Over-Pricing Your Home
Pricing a house incorrectly almost always leads to lost money, whether the home is priced too low or too high. The dangers of underpricing may be different from the dangers of overpricing, but often the results are the same.
Don't overprice your home. Often the biggest mistake you can make when listing your Nashville home, overpricing your home from the start makes it hard to generate any interest out of the gate, not to mention it will almost always guarantee your home will sit on the market longer than it normally should. Regardless of what you want out of your home, price it for what you can realistically expect to get.
An overpriced home can take a very long time to sell. The longer a home takes to sell, the harder it can be to get people to look at the home. Many buyers assume if a home has been on the market for a long time, there must be something wrong with it.
Typically, if a home starts too expensive, the homeowner must eventually lower the price to get buyers to see the house. Lowering the price shows buyers that the homeowner is willing to lower the cost. Many buyers will ask for further price reductions when they make an offer. Often, a home that starts too high will sell for a much lower price.
Even if someone does make a high offer on an overpriced home, there's a good chance that the home will not appraise for an inflated amount. This could cause the deal to fall apart or could result in the homeowner lowering the price anyway.
A home priced too low may sell quickly, but depending on how underpriced the home is, the Spring Hill TN home seller could lose a lot of money. In addition, some home buyers will become suspicious of an underpriced home. They'll wonder if something is wrong with the home.
Many homeowners interested in underpricing their homes have that interest because they believe the low price could trigger a bidding war. In the event of a bidding war, the price of the home may exceed the actual value of the home, resulting in a greater profit for the seller. However, this strategy isn't without risks because it's entirely possible that a bidding war won't happen. Fear of defect keeps buyers away, or the house ultimately sells for less than its value.
An underpriced home may sell more quickly, but the suspicion that the home may need major repairs–like a roof replacement, correction of unpermitted work, or repairs to foundation damage–may keep prospective buyers away from home.
Adjusting the Price After the Listing is Posted
In most cases, sellers need to contact their listing agent to make changes to the asking price for sale. Changes are most commonly made to reduce the property price if there has not been a lot of activity on the listing. If several prospective buyers have visited the home and expressed an unwillingness to pay such a high price or have given low offers, you may consider a reduction. Adjusting the price in the other direction is rarer and typically happens after the sellers have made a significant change to the home (i.e., replacing the roof or updating the HVAC system). In some cases, a sudden spike in the neighborhood can prompt a list price increase. In any situation, start by discussing your plans with your agent to ensure your expectations are appropriate.
How to Price a Luxury Home
There probably isn't a single Nashville luxury home seller who wouldn't want to sell their house for as much money as possible. As tempting as it may be to drive the asking price upwards to increase the profits made, overpricing usually makes it more difficult to sell any dwelling, especially considering how most homebuyers either work with agents or are educated enough to know when someone is trying to screw them over.
Real estate agents in Nashville like to conduct thorough market analyses for determining an estimated value in which their clients may dispose of dwellings. However, these projected figures tend to fluctuate depending on the local housing market and the prices of similar homes within the same area.
While numerous factors could help the seller bag a better deal, it's important not to raise the asking price irrationally. Here are some points that prompt people to raise their asking prices unreasonably high:
Upgrades to the Home
First and foremost is certain upgrades given to the residence – while adding certain infrastructural upgrades to the residence will help any homebuyer regain a good portion of their investment, these aren't good enough to retain it 100 percent. Moreover, the more personalized a certain upgrade may be (e.g., imported ceiling fan, black flooring, etc.), the less valuable it becomes in the eyes of potential buyers.
Overpricing on the Initial Purchase
Second would be instances where sellers pay too much for the original dwelling – sometimes first-time homebuyers don't know they've been ripped off until they meet a reputable realtor. Driving the price up higher in an attempt to recover the investment at the expense of sellers doesn't warrant the action and will most of the time be counterproductive.
Plans to Purchase a More Expensive Residence
As for the third and last factor, we have scenarios where inexperienced Nashville sellers jack up their asking price to afford a new residence at a higher-priced community. Anyone moving to a more prominent society would easily be tempted to dispose of his original abode at a higher cost to help financially shoulder the move. While it's normal practice, some sellers tend to get a little carried away and increase their asking prices even higher, thereby hindering their ability to make a sale.
Folks who've tried selling their houses before will most likely have heard of the term "fair market value," which is basically the highest amount an educated buyer is willing to pay. Unlike asking price, the fair market value is derived utilizing several factors to achieve a total that's somewhat favorable for both the buyer and seller.
Ultimately, fair market value will usually have its way. That's why it's important to hire a trusted real estate agent to price your home appropriately when you put it on the market.
It's in the homeowner's best interest to have accurate expectations when it comes to selling a home. It can be fun to look at estimates of your own home and dream about how much money you'll make, but the reality is that many elements come into play when finalizing a selling price. As long as you've developed a solid plan with your real estate agent and can be patient with the process, you'll have a better chance of asking and selling prices more similar.
How a Real Estate Agent Can Get You a Higher Price For Your Home
There are many ways that a good real estate agent can help you get a better price for your home. First, an experienced real estate agent will be able to offer an objective opinion about what you can do to your home to make it more attractive to buyers. Whether you need to stage the property, make home improvements, or possibly clean up a lot, your real estate agent can offer real, practical advice that can help you prepare your property.
Real estate agents are also trained in the art of negotiation. They know how to price a home correctly to draw in buyers, and once the buyers have made an offer, real estate agents know how to negotiate without scaring buyers away.
Finally, real estate agents know how to market homes. They can craft listings that interest buyers and know which pictures to choose when posting a listing. These professional skills are developed over time and with training. Without a good real estate agent, many buyers lose out on profits when selling a home.
Setting a list price for your home is the most important step a seller takes. Set the price too high and the home will likely linger on the market and become stale. Set the price too low and, while the home may sell quickly, your profit will be greatly reduced. A licensed real estate professional has the experience and access to data that will help set a price for your home that accurately reflects today's market.
Work With a Professional
If you're a homeowner who would like to sell your home soon, work with a real estate professional to ensure that your home is priced properly. A good real estate professional will know how to compare your home to other properties in the area and determine the price of that home.
Like many things, not all homes are created equal, so determining how to price your home right is one of the most important elements in how much success you'll have once listed your home or condo. Of course, our team of local Nashville real estate agents will be there every step of the way should you decide to list with the Ashton Real Estate Group, so if you want peace of mind while selling your home, reach out to our expert team today.
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