“How much should I sell my house for?”
This is the question sellers ask when putting their home on the market, and it’s important to get it right. Price too high, and it could take a long time to sell your home. Price too low, and you leave money on the table.
Even in a sellers’ market, sellers face the challenge of pricing their home correctly so it sells quickly and for the optimal price. Here are some tips on pricing your home in a seller’s market.
Start with the Comps
One of the first things real estate agents do when determining a listing price with their clients is to look at comps. Short for “comparable sales,” comps are recently sold homes that are similar in location, size, and condition to the home being listed. They give a ballpark figure and serve as a good starting point when determining a listing price.
Go Beyond the Comps for the “Market Setting” Price
Comps are just the start, however. One downside is that in a fast-changing market, data from comps become outdated quickly. If the market has changed within the last year to heavily favor sellers, a homeowner that relies on comps too much might end up pricing their home below market value.
That’s why you have to take other factors besides comps into consideration when pricing your home in a seller’s market. Here are some factors to consider:
Total growth of the market at present. What does the local real estate market look like right now in terms of growth? This is information your real estate agent can provide and discuss with you.
Total projected growth this year. What does the year ahead look like for real estate in your area? Is it expected to slow down, speed up, plateau? Once again, this is something a well-informed real estate agent can discuss with you.
Amount/Lack of inventory. Lack of inventory across the country right now is a large factor in rising house prices. Buyers are willing to pay more when they have fewer options, which is a big advantage for sellers.
Amount/Abundance of buyers. Buyers pay more when they have to compete with lots of other buyers, too. Low inventory coupled with an abundance of buyers – the situation we’re in right now in the Charleston area – means homes priced on the high side still sell.
Recent renovations. Homes that have been well maintained and updated sell for more. Buyers value practical things like a new roof or a new AC system as well as design-focused renovations that update the home to meet current tastes and trends.
Home’s unique factors. What sets your house apart from the others? You want to play up these factors when marketing your home for sale. Here are some examples to think about:
- Location: it has the best location on the golf course, or it has the best views, etc.
- Community: it’s in a sought-after community, or it’s in an old and established neighborhood, or it’s in a new development with few remaining lots for sale, etc.
- Layout: it has a master/primary bedroom on the first floor, or it has an open concept layout, etc.
- Design: the finishes reflect a contemporary design aesthetic, e.g., Modern Coastal is popular in the greater Charleston area
These factors should be taken into consideration when pricing your home. They may all fall in your favor, or some may balance others out – for example, maybe your home is in an excellent location close to the subdivision’s clubhouse and pool (which raises the value), but the kitchen hasn’t been updated since the 90s (which lowers the value).
Once again, this is where an experienced real estate agent can help. An agent who knows your area well and is up on what local homebuyers are looking for can help you evaluate all the factors above to come to a competitive yet fair “market setting” price.
Circle Back to Comps
Real estate agents and sellers aren’t the only ones who look at comps. Savvy homebuyers check them out, too, to make sure that the home they’re considering is in line with similar recently sold homes in terms of price.
This is when you can again use comps to your advantage if you’re smart. If you’re listing your home above sales prices of comparable recent sales, then you (and your real estate agent) should be able to answer the question, “Why is the price of this home so much?” Point to the factors listed above, such as a renovated master bathroom, exceptional water views, location in an exclusive neighborhood, and so on, to justify the price and make your home more appealing.
The Right Selling Strategy in a Sellers’ Market
If you’re in a very strong sellers’ market, you may think, “Why not price my home high just to see if there are any takers?” But this strategy can backfire. A home that’s priced too high likely won’t sell quickly, and homebuyers are often wary of a home that’s been on the market too many days – especially in a hot market like we’re seeing now in Charleston, where homes are being snapped up right away. The longer a home stays on the market, the more wary buyers become. They may wonder what’s wrong with the house and why no one else is buying it and stay away. In the end, you might have to lower your price substantially to get it sold, possibly lower than you could have sold it if you had priced it correctly to begin with.
As an experienced real estate agent in the Charleston, SC area, I work with sellers to build a sales strategy and create demand in a “market setting” price zone. If you’re looking to sell your home, or if you’re thinking about buying, give me a call. My name is Kenton Selvey and I’m an experienced Realtor with William Means helping people buy and sell homes in Charleston, Daniel Island, Mt. Pleasant, James Island, and beyond. I’m ready to help you take advantage of this seller’s market, so call me today at 843-806-7222 or email me here. I look forward to hearing from you!