In an ideal world, your Central Austin home will sell quickly and for top dollar. But how do you achieve this real estate nirvana? In a word, price.
Okay, it’s really five words – price, condition, location, marketing, and experience. Each of those factors play a key role in how your home is positioned in the market place, and while you can’t do anything to change your home’s location, you do have control over the condition, the price of your home, and who might represent you -- not just in marketing your home but through the twist and turns of a real estate transaction. We will discuss making repairs and improvements to increase the return on your investment in another post, but for today we’ll focus on the easiest thing you can to get your home sold, pricing.
What’s your goal?
Before getting hung up on a dollar amount, it is a good idea to identify your objective. Are you just fishing for offers but don’t really need to sell? Are you motivated to sell your home quickly for top dollar? Or are you looking for certainty? There are three basic pricing strategies to consider depending on what you want to achieve, each with its benefits and drawbacks.
Know your competition.
Once you have a clear goal in mind, take a look around at the other homes for sale in your neighborhood and the surrounding neighborhoods. Pretend you’re a buyer and compare your home to what else is on the market. If you can, take off the rose-colored glasses to honestly assess how your home’s condition and location stacks up. With this information in mind, you can start to figure out the price at which your home becomes exciting to potential buyers.
Select a pricing strategy that meets your goal.
With a goal in mind and some general market knowledge, it’s time to select a pricing strategy. We usually look at 3 different pricing models when counseling our sellers. We also recommend that each pricing strategy have a well-thought out “what if” backup plan that accounts for possible changes in the market. As you consider each of the strategies below, remember your circumstances and goals.
- Option 1: Go for it price
The go for it price is usually going to be a little higher than the current market average. And that means it’s risky. Because the price is higher than most other comparable homes, this option suits sellers that don’t necessarily have to sell.
A home is most attractive to potential buyers when it is new to the market. A home loses its shine the longer it is for sale, and as a result, it won’t attract as many potential buyers. If you price your home too high at the beginning, you may be missing a crucial opportunity to attract buyers. House hunters may overlook your property because it’s not in the price bracket they are searching in. Even if you lower the price later, some buyers will remember they dismissed your home initially and not give it a second look.
That said, we’ve had some great successes with sellers that decided to go for it. In most of those cases it was because the home was unlike anything else on the market. We also sometimes use this model when the market is very competitive; you can use the frenzy in the rest of the market to drive a desperate buyer to pay your “go for it” price.
- Option 2: Market price
With the market price, a home is priced in line with the market like everyone else. It’s a safer option since there is greater certainty the home will sell. On the other hand, this means your home is unlikely to stand out from the pack, which can mean a buyer may not be motivated to buy it out of fear of losing the deal.
- Option 3: Feeding frenzy
To create a feeding frenzy we price your home slightly below market. This creates an auction-like environment where buyers let their excitement and fear of loss drive their purchase. By pricing a home slightly below market we intentionally play on a buyer’s emotions and create competition for your home. In turn, that competition often results in a buyer overpaying for your home. The feeding frenzy method is often the best strategy for those seeking to make the most money on the sale of their home. Since the idea is to create urgency and competition, it is important to have a pre-determined plan for handling multiple offers. An experienced real estate agent can help you manage this to your advantage while keeping the drama from the potential buyers to a minimum.
It’s important to get the price right at the beginning since sellers tend to make less money the longer a home sits on the market. But how much money are we talking about here? Depending on current market conditions and the time of year, there is usually a 10-20% difference between the “go for it” price and the “feeding frenzy” price. After selling real estate in Central Austin for over 20 years, we’ve found that most of our clients choose either the market price or go for it price.
Don’t rely too heavily on price per foot.
Many home sellers like to talk about the average price per foot of homes selling in their neighborhood. In our opinion, price per foot is only one of several indicators that factor into developing a pricing strategy to sell your home. Today’s buyer isn’t looking at just one neighborhood or one isolated area. Therefore, we have to factor your home into the big picture of the Austin market as a whole. In Central Austin in particular, the desirability of the neighborhood, value of the lot, and quality of the home can start to blur. Which leads us to our next recommendation…
Find an experienced Realtor with in-depth market knowledge of your neighborhood.
Pricing is both an art and a science. There is no substitute for finding a Realtor who has sold homes in and around your neighborhood for many years. You want someone who has experience with all aspects of Central Austin’s real estate cycle, who can easily navigate market fluctuations, foresee potential deal turbulence, and has the skill to counsel you through the process.
Our goal is to take the mystery out of real estate.
We hope these secrets to pricing your Central Austin home did just that. And if you’re considering selling your home, we hope you will schedule a free, no obligation consultation with us. We’d be happy to clearly explain the steps and strategy to help get your home sold.
Want to know more about selling your home? Take a look at some of our other blog posts:
Home sales (and values) have been on a strong uptick in Austin thanks to low interest rate...
A small number of homeowners try to sell their home on their own without the professional ...
When it comes time to sell your home, most folks want to sell quickly and for top dollar. ...
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