How to price your home to sell?
Well, the price you list your home for is what will determine the time your property takes to sell in the market. To strike the perfect balance between the price and the timing you want for the sale is normally the greatest challenge for most property sellers.
Let’s take a look at some of the key factors that influence the price of your home.
Incorrectly Pricing Your Home
If you incorrectly price your home, then it might languish on the market for a long period of time and that’s the last thing we want to happen.
But it does happen and here are some examples:
i. You as the owner want to receive more than you owe on the property and possibly more than it’s worth.
ii. You might consider the pricing of other homes in the same street and feel yours should go for more.
iii. If you the seller consider similar homes but at other locations.
iv. You want to price it higher than it was valued in the previous year.
Ascertain your home’s current market value as accurately as possible, since the fact of the matter is buyers are only prepared to pay today’s market value for your home.
Factors that influence property prices
There are many factors that will influence your property price, but the two major ones are:
Rental Demand: This is where more people want to rent in your suburb than there are available properties for rent. This not only drives rental prices up, but also property sales prices because they can command more rent for their owners.
Supply and Demand: Sales demand occurs if there is high demand for your area and your type of property, and fewer properties available for sale. There are likely to be more buyers than sellers in this case: hence, a high sales demand which in turn drives prices up and vice versa.
You need to accurately determine both, and to do so you must thoroughly research the market conditions of your suburb.
The newspaper or real estate listed prices might be misleading, since they do not offer you all the information you need to set a proper price. Usually they contain only 20% of the information you need to price your home for the best result.
The prices might not be accurate and you end up falling into the same hole of mis-pricing.
Research Sales Demand
To do this, there are a number of data sources you can use to accurately determine the market conditions of your suburb. Some are free and readily available, while others are available for a fee, but can be an excellent investment. This may include specific sales records for your surrounding streets.
You can consider starting by consulting some of the following sources:
- My RP Data – www.myrpdata.com.au: ‘My RP Data’ is part of the ‘RP Data’ company but tailored for the public. This site provides many similar reports to APM (Australian Property Monitors), but also integrates maps for a view of your area when pricing comparable properties.
- Local and Regional newspapers – There is a real estate section now in most newspapers. They list all the recent sales results for the area or suburb. This up-to-the-minute data can take up to three months to reflect in official databanks, many of which require payment to access, and is of great value.
- Australian Property Monitors – (www.apm.com.au): This site features a ‘Home Price Guide’ section for sellers. You can view price history by street, the post codes, current price estimates, a 10-year price trend, and even a price forecast for your property.
You might also consider researching a number of properties in the market that are quite similar to yours in terms of location, features and presentation.
Take interest in:
- Their pricing now
- The price when they first listed
- Their duration on the market
- What interest levels the buyers have and what offers, if any, have been made
- The marketing strategy used.
If you’d like a free property valuation, please feel free to Contact Me.
Research Rental Demand
Rental vacancy rates for a suburb or area is what indicates how much demand there is in an area. However, proper research should be done and accurate data analysed before settling on your selling price.
This is how rental demand can impact property prices within your area although there could be other factors at play:
High Demand: When the rental demand is high, the properties rent within one week. The greater the competition for your kind of property, the higher the amount of money people are willing to spend on it. Your home can definitely be priced high.
Medium Demand: When there is medium rental demand, the properties rent within four weeks. You can expect a timely sale if you list your property at market value. This means the price has to be just right for your kind of property.
Low Demand: This is where properties take more than four weeks to rent. You risk your property sitting on the market for a long period of time if you price it even slightly above market value. It usually even goes slightly below, just to attract more people.
To get more information, you can mystery call three real estate offices in your area to inquire about the availability of rentals and demand for your type of property. The data you gather will give you a rough idea where your property stands with regard to pricing your home, and a starting point for talking marketing with your agent.
It is ideal to price your home within 10% of its market value as indicated by the data.
Seek Advice
After doing your own research, and having a rough idea what your property might be worth, it’s advisable to hear what other people who are experienced in real estate have to say, professional or otherwise.
Get an independent valuation of your home to help you make your final decision on price. Take in suggestions about what might enhance your property to increase its value.
If using an agent, ask them to complete a comparative market analysis for your property and indicate the price range in which they believe the property falls. Encourage them to back up their data with evidence just to be on the safe side.
Make an Informed Decision
After all is said and done – and no matter what anyone tells you – your sale price is up to you. You alone decide the price you want to go to the market with. It is of utmost importance that you take into consideration the results of your research and the professional advice given.
If you choose to ignore these findings in favour of setting your ideal price and hoping for the best basing your price on luck, you risk losing money and time before you make a sale.
There are some factors that contribute to this. They include:
- A freshly marketed property attracts peak interest. It’s at this stage you can take advantage, and with the right pricing, make a quick sale.
- If your price is unreasonable from the outset, you scare buyers away and waste significant marketing dollars. Your property takes more time in the market at the risk of losing value.
- If you miss out on a sale the first time, you will most likely need to reduce your price, and spend more time and money on marketing to make buyers aware of this.
- There are buyers eagerly waiting to own a property just like yours right now and for the right price, if your price reflects today’s fair market value, you can expect competition for your home. So if your home is priced at the right market value, you need to add as much extra value to it as you can just to give it the upper hand over the competition. If priced more than 10% above market value, the majority of buyers are likely to pass it by, fearful of paying too much.
TO CONCLUDE
Eventually your home will sell but only after buyers exhaust all other cheaper options or feel the urgency and competition to do so.
The trick is to sell your property as quickly as possible, because when similar properties at more affordable prices come up for sale, there’s a real risk your property will sit on the market for a very long time.