Selling Your House? Why Your Asking Price Matters
how to leverage the marketing power of your asking price to drive maximum interest
As a seller, now more than ever, your asking price can be a powerful tool. Choosing the right asking price means toeing the line between driving maximum eyeballs to your property, while also maintaining buyer confidence in your home's value. Here's how to strike that balance - and how leveraging this strategy can help you maximize your final sale price.
More of a reader? Catch the video transcript below!
Today, we’re talking about one of the most important factors when it comes to selling your home: the asking price.
We’ll also go into the market we’re in today compared to where we were, and why the asking price is more of a marketing tool than what you’re actually going to get for the house.
What role has this booming market played in asking prices?
In the last two years, in this kind of “Covid Marketplace” where rates were pressed artificially low via government intervention, it drove an unprecedented amount of demand for homes. We saw prices shoot upwards, and a white-hot market with buyers scrambling and willing to pay anything to get into a house.
Back in that market, people would just pick a seemingly random number and throw it on the market. You didn’t really need to be very strategic about pricing your home; you knew you would get four, five, six - even ten or more offers.
Today, it’s a lot different. Buyer demand is way down. Purchase applications for mortgages are down around 40%, and we’re seeing pending sales down over 30% compared to this time last year.
The euphoria is gone, rates are up, and the market is normalizing. Buyers have sort of taken off their rose-colored glasses and are taking a more practical approach to home buying.
Why is asking price a marketing tool in today’s market?
It’s very rare that you can come up with a list price and see the home sell for that price. Your agent should be able to give you a sort of rough estimate by comparing your home to other similar homes in the area; but at the end of the day, every single home is different and every buyer is going to have their own preferences in terms of layout, lot, and things of that nature.
You want to price your home in such a fashion that drives the maximum amount of eyeballs to the property without degrading the sales price.
So, how do you do that? You find out a really right estimate of where you think the market value is, and then list just slightly below that.
Check out this graphic below. This shows you the impact of listing price on the visibility of your listing at different price points above and below market value.
This tells us that we want to price right in the middle (and ideally, just slightly lower) because when the buyer is on a listing website, it’s going to show them other homes in the area that recently sold. So, if it’s priced too high, buyers will notice.
However, if your home is listed a bit lower than some of the other homes that recently sold in the area, it looks like a great value in the eyes of the buyer (even if it’s not as updated as the other homes).
If it’s listed too low, buyers might think it’s a scam. So, you want to do your research and find that sweet spot that’s just slightly below market value.
Remember that most buyers start their home search online. The right price will lead to more clicks, which leads to more feet in the door, which leads to more offers on your home. This will give you, the seller, more negotiating power in the sale of your home!
Pro Tip of the Day
Buyers are more strategic in today’s market. This means that sellers have to be more strategic in pricing their homes.
Even if your home is priced right, it may sit on the market for a little while. In today’s market, buyers are taking more time with their home searches. Homes aren’t flying off the shelves like they were in the past two years.
Talk to your agent and make sure you understand what the average days on market is for your neighborhood. The home may be priced appropriately, but it still might sit on the market - and that’s okay! That’s normal in the real estate game, even though it hasn’t felt normal in the past two years.
Brent Edwards (aka Brent the Broker) is a residential real estate agent and Realtor in San Diego, CA who helps clients buy and sell homes in San Diego, California and all surrounding areas. Brent is a highly-recommended Realtor in San Diego by family, friends and past clients. Call Brent today at 619-550-8070 if you have any questions about real estate in San Diego or you'd like to buy or sell a home.
