You’ll sometimes hear people talk about the four Ps of marketing: product, promotion, place and price. When selling a house, it’s important to remember that some of those Ps are fixed and some are variable. You need to control your controllables, as the expression goes, and focus on the things that are within your power to change.
Product refers to the actual house: the number of rooms, the view, the condition. Is it staged properly? Is the front door freshly painted? Is the landscaping in good shape?
Promotion is what the agent does to let people know the property is for sale — putting it on the multiple-listing service, promoting it online, sending out a flyer, putting a sign in the yard. The more people who know your house is for sale, the more traffic you’ll get and possibly the higher the price you’ll receive because the pool of potential buyers will be bigger.
Place is the location of the home, which you obviously can’t change.
Price is one of the most important variables in play. Proper pricing can actually accelerate your marketing and can be the key to getting a property sold. If you have a house worth $400,000 but you’re willing to sell it for $200,000, someone’s going to buy it immediately. But if it’s priced at $450,000, you may never get an offer.
Here are some tips to help you set the best price for your home:
- Some people use an automated valuation model (AVM) to get a gut check on their home’s approximate worth. AVMs are computer algorithms that use a host of variables like tax records to guess your home’s value. Perhaps the best-known example is Zillow’s “Zestimate.” But it’s important to remember that AVMs are not really that accurate, especially in areas with unique properties that vary widely in size and value. It’s a Zestimate, not a “Zaccurate” value.
- Real estate agents will look at all of the same factors as an AVM, but with a human touch that will make their assessment more accurate. They can weed out properties that aren’t similar. Unlike an AVM, they don’t just consider what’s already sold but can look forward to what’s currently on the market and what’s under contract but hasn’t yet settled.
- A professional appraiser typically works for a lender and is trying to appraise the value of the asset that the mortgage will be placed on. They are only allowed to go backward and look at completed sales over the last six months to determine value. Appraisals are generally pretty accurate, but are also fairly expensive.
- Housefax is a relatively new player on the scene. It works like Carfax for automobiles, providing a report on your property’s value and history. Housefax appraisals are conducted by professional appraisers, but at half the price because they’re working directly with the homeowner. You can find them at HouseFax.com.
Once you’re ready to list, I recommend that you spend a few hours thinking like a buyer, critically assessing your home against the competition. Ask your agent to show you five competing homes without telling you their list prices. Walk through these other homes and ask yourself what you think it’s worth. Ask yourself: Is this house better or worse than mine? How does my price compare?
I also recommend that you don’t fall for the old trick of having your home’s price end in 99. If buyers can afford a $430,000 home, they’ll set their search brackets at $400,000 to $450,000. If your house is listed at $399,999, it won’t come up when they search.
Finally, remember that pricing is an ongoing discussion. Don’t just set it and forget it. If the property looks the best it can, and you’re getting a lot of showings, but you’re not getting second showings or offers, it’s not a promotion problem. It’s the price.
By the time you’ve had 30 buyers come through, you should have a contract. If you realize you’ve come out of the gate too high, don’t be afraid to drop your price. A reduced price can be a stigma, but the bigger stigma is not selling. Price it to move.