When you decide to sell your home, you of course want the highest return from its sale. Determining your "asking price" is the most important step in preparing your house for sale. Some common pricing concerns are below.

(1) We need the money.

An owner’s need for money does not affect the market value of the home. If you found a home you liked that was $10,000 over market value, would you pay the extra money just because you knew the owners really needed the money? Of course not. You have two options – you can sell your home at the current market value or you can stay in your home and wait for it to appreciate to the value you need it to be. Keep in mind that if your home is appreciating, so are other homes so even though you will sell your home for more money, you will also end up paying more for your new home.



(2) We can always come down on our price.

When you start with an overpriced home, you will gradually have to reduce the price until it is at market value. By the time you do this, the people seeing your home will wonder why it’s been on the market so long. What’s wrong with this home? Why isn’t it selling? You may then be forced to lower your price to below market value just to get it to sell.



(3) They can always make an offer.

Before a buyer can make an offer on your home they have to see it. Most buyers only look in their price range, and perhaps a little over, but then focus on their price range. By overpricing your home, you are putting it out of sight of potential buyers. The wrong price attracts the wrong buyers. The buyers who could afford your home if it was priced at market value aren’t seeing it and those that can afford your home won’t be interested compared to other homes in their price range priced at market value. Sure, you may get showings but you won’t get a contract.



(4) We’ve made a lot of improvements to the home.

Most improvements are made for enjoyment, not for resale. If you knew you were going to sell your home would you have made these same improvements? Most people would say no because they know they wouldn’t get their money back from their improvements. Some improvements, such as adding bathrooms or upgrading the kitchen, do add value to a home, others, like painting, hot tubs or adding extensive landscaping, do not.



(5) We paid more for our house than that!

There is no direct relationship between cost and value. What you paid for something has nothing to do with what its current value is. A good example is the stock market – just because you paid $10 per share does not mean that in 6 months it’s going to be worth $10 per share or more. Another example of this is to imagine that you acquired your home through inheritance and thus paid nothing for the home. What do you think the home would be worth now that you want to sell it? You’re probably thinking, “as much as we could get for it.” Why? You didn’t pay anything for the home.



(6) We’re moving to a higher priced area so we need to
get all the money we can from this home.

Your destination does not affect the market value of your home. Moving to a higher or lower priced area once you sell your home has no impact on the current market value of your home. Your home is worth what it is worth regardless of where you are planning on moving.



(7) I want to list my home at the upper end of the price range.
Can’t we just list it high for a few weeks to see what happens?

Homes that are priced too high miss their target market. Qualified buyers who might find the home just right for their needs won’t see your home, or make an offer on it, because it is out of their price range. If they are shown a home that is overpriced when it first comes on the market and do not buy because they feel it’s not a good value, they’re not likely to revisit the home once the price is lowered (they’ve already eliminated your home as a possibility). Real estate agents are unlikely to show a house that is overpriced unless, unfortunately, it will make a competing property look like a better value. This is not the type of exposure you want your home to receive.

Some home sellers will take the "let’s try it and see what happens" approach. They may feel that they can always decrease the asking price if they are not receiving offers. But testing the market in this manner can be dangerous. A property receives its best exposure during the first three to five weeks after it is listed. After this point, many agents lose their enthusiasm as other new (and possibly better valued) listings come onto the market. Some home sellers forget that they have quite a bit of competition and that buyers are generally very well informed consumers.

If your home is priced right from the beginning, you have the best opportunity of reaching the most qualified buyers. Buyers who have seen most available homes in their price range are just waiting for the right house to come on the market. That’s why a well priced home often sells quickly once it is actually put on the market. You want your home to be viewed in this manner for the highest return on your investment.

Throughout the country, Multiple Listing Association statistics show that the longer a property is on the market, the lower the selling price. The home becomes "stale" and a price reduction results.