You’ve hired someone to stage your home, improved the curb appeal of the residence, and made your home ready for sale. Now, it’s time to choose a list price for your home that will appeal to buyers and ensure a competitive listing on the San Francisco MLS.
Choosing an asking price that creates an attractive listing means delving into the current real estate market and paying attention to things like average time on the market, current housing supply and demand, and the prevalence of homes selling for more than their list price.
Pricing your home accurately is the most important part of selling your property. Consider these seven rules for pricing your home correctly as you ready your home for sale.
1. Research past sales.
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Examining current prices for homes may offer you some information about market trends, but those active listings won’t tell you the real story. Investigating actual sales prices for comparable homes provides concrete data on current market behavior.
You might not find an identical listing to your home, but you’ll get a general idea of how much buyers will pay, as well as what price will encourage a quick sale versus a price that may lead to a listing that remains on the market for many months.
Also, look deeper than the final selling price when conducting your research. Take note of what amenities lead to high selling prices. Does your home feature those in-demand items like granite countertops, or does your home still feature laminate?
2. Don’t compare homes in other neighborhoods.
As you research past sales and look for similar homes, don’t cast your net too far from your home’s address. A Victorian in Pacific Heights with a view of the Golden Gate Bridge isn’t comparable to a place in Oceanview, even if the number of bedrooms and the sizes are identical.
Consider the appraisal guidelines on comparable sales, published by lender Fannie Mae:
“Comparable sales from within the same neighborhood (including subdivision or project) as the subject property should be used when possible. Sale activity from within the neighborhood is the best indicator of value for properties in that neighborhood as sales prices of comparable properties from the same location should reflect the same positive and negative location characteristics.”
3. Arrange a home inspection.
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Inspections and appraisals regularly occur during home sales, and they’re a common feature of the mortgage approval process for buyers. Scheduling a home inspection in advance of your listing date helps avoid last-minute problems and delays when a buyer makes an offer on your home, and the bank’s inspector finds something wrong with your home that hinders the sale.
Not only will an inspection help you set your home’s list price at a reasonable place, but you’ll also reduce potential sales hassles after you accept a buyer’s offer.
4. Stand in the buyer’s shoes.
An excellent debater will consider the argument from his opponent’s viewpoint when formulating a response, and it’s useful to engage in the same tactic when selling a home. Put yourself in the buyer’s shoes, and look through San Francisco’s homes for sale.
Imagine you’re looking for a home like your current residence, and you’re a typical home buyer with no more than a modest level of real estate sales experience.
Consider the following when adopting the persona of your home’s buyer:
- Do any listings seem priced well over their real value?
- Are some homes priced suspiciously below general market prices?
- What amenities seem to encourage the highest asking prices?
A price based solely on market trends and square footage is only half the story. Don’t ignore the intuition and perception of potential buyers. Pricing your home based on facts and figures is essential, but the gut-reaction of buyers is vital, too.
5. Don’t choose a price at the absolute maximum.
With your research, you may have an excellent idea of the potential maximum selling price for your home, but this number isn’t where you’ll want to set your list price. You must leave a little room for negotiation.
A simple web search on any major search engine will result in hundreds of thousands of articles on the best negotiating tactics for buyers. Price negotiation is a process virtually every home buyer, and most sellers expect to engage in during the bidding process.
Although you’re likely aware that San Francisco is one of the nation’s most competitive markets, climbing to the absolute top with your list price may reduce the number of bids you receive for your home and lead to a permanent for sale sign in your front yard.
6. Set a price to sell quickly.
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As any real estate agent will share, initial perception greatly influences a buyer’s opinion of a home. Curb appeal does help a buyer form an opinion, but so does the number of days a home has been on the market. Many buyers will assume a home that’s been for sale for several months has a problem.
San Francisco is short on supply, and recent data suggest most homes sell within two months. Aiming for a brief stay on the market is essential, even if you aren’t in a hurry to sell. List your home when you’re ready to let your home go, and choose a list price that will help you accomplish that goal.
Many buyers today will use the Internet to interact with their future home for the first time, and one of the first numbers they’ll notice after the sales price is how long the home has been on the market.
7. Modify the list price promptly and without fanfare.
You may feel the list price you choose is final after you put significant effort into pricing your home. However, even your most educated guess might be too aggressive. Respond quickly to how the market treats your home. If you find little interest from buyers, don’t hesitate to change the price.
You might not need to modify the price a significant amount. Employing charm pricing, which is the simple strategy of pricing something at $9.99 rather than an even $10, may encourage bids from buyers who weren’t interested when the home was priced just a fraction higher.
