The most crucial step in the home-selling process is setting the right price. If prices are too high, you will scare off potential buyers, and if too low, you will lose the capital appreciation. Finding the right prices for your house is the key to ensuring a smooth and profitable sale. Accurate pricing is crucial, but why? It can be a difference between a quick sale and a drawn-out process that eventually leads to reduced prices.
Buyers, in this day and age, are smart. They rely on online tools to compare prices of houses in a particular locality, and hence, overpricing could drive buyers away, and underpricing can bring forth scepticism. Here are the important reasons why it is essential to set an accurate price:
- First impression is the last impression. Even though you know potential buyers will haggle for the competitive price, you are not supposed to quote way too high. Overpricing could be off-putting for various potential prospects. They will most likely believe that it would be implausible to negotiate for better market prices. As a result, they will never show interest in your property. Some, out of curiosity, might want to show interest in your property to know what is so special about it that you are asking for this much higher price, but they will never show any inclination to purchase your property.
- A correctly priced home is likely to attract buyers. The more prospects you have, the better it is. The first two weeks are crucial once a house is put up for sale. When buyers find that prices are outrageously high, they will not show any interest in buying your property. As a result, you may lose those who are serious buyers.
- Accurately priced houses stand out in the market. This increases the chances of your house being reviewed by people. When you receive multiple offers, you can sell your property at better prices.
Ways to set the right price for your home
Here are the ways to set the right prices for your home:
Understand your local market
When it comes to setting a price, you cannot choose a random figure. First off, you should research your local housing market. Is it a buyer’s market or a seller’s market? It is called a buyer’s market where buyers have the upper hand because the house has been in the market for a long period of time. However, if the house has high demand and is able to be sold quickly, it is called seller’s market. A seller will have the upper hand.
Knowing which type of market you belong to could help you influence the pricing strategy. If you belong to the seller’s market, you will be able to quote a slightly higher price. This will help you gain some additional profits. However, in a buyer’s market, you will have to set the most competitive prices in order to attract potential buyers.
Do a competitive market analysis
A comparative market analysis will help you determine the most accurate price of your house. Here comes the role of real estate agents. They know the accurate prices. It is always suggested that you should never quote higher than the actual market price because you will lose potential clients. With the help of competitive market analysis, you will be able to gain insight into:
- Recent sale price. You will get to know the market price of similar-sized houses in the same location.
- Days on market. How long does it take for a home of a similar size to sell?
- Pricing adjustment. Any price negotiation during the sale.
Using this data, you can arrive at a price that your potential clients find suitable. This will increase your chances of clinching a deal sooner rather than later.
Consider home improvements
Undoubtedly, a leaky roof, broken, and loose tiles will never appeal to any buyer. Cosmetic upgrades are essential to speed up sales. Home remodelling cannot warrant a significant rise in prices, but it helps with a little boost.
If you find that your house is not in good condition to be sold for the market price, try to make some modifications. Sometimes, a fresh lick of paint is enough. Kitchen remodelling and roof repairs are large projects that increase the value of a house. If you do not have enough budget to revamp your house, you should take out home improvement loans.
This cannot be a big concern for you because you can settle the whole debt after the sale of your property, provided you do not want to invest the capital gain to secure a larger property. At the time of taking out these loans, make sure that you will not struggle to avail yourself of competitive interest rates.
If possible, avoid owing any other debt, especially short-term loans such as payday loans. If your bad credit rating is getting in the way of qualifying for lower interest rates, consider applying for guarantor loans.
Play with psychology
Psychological pricing can speed up sales. For instance, if the market value of your house is £500,000, you should list it for £499,900. Although there is a difference of only £100, it seems as if you are underselling your house by £100,000. This strategy tricks a buyer into believing that the property is much cheaper.
Monitor market feedback
After listing your house, you should keep monitoring the responses of people. Getting feedback from them is essential to adjusting the prices. Your real estate agent would let you know how your potential clients are responding after knowing the prices of your property. Re-evaluate your price if they are not showing any interest.
The final word
It is vital to set the right price for your house, because otherwise your buyers will not show any interest, or you will likely lose capital appreciation. Consult a real estate agent to know the exact market price. Re-evaluate the price if your house does not get the desired response.