Setting the right price for your home is one of the most important considerations when selling your home. An overpriced property may sit on the market for too long, while underpricing could cost you money. In this blog, we’ll explore why a realistic sale price is crucial to attracting buyers, speeding up the sale process, and maximising your sale proceeds.
When it comes to selling your home, one of the most crucial decisions you’ll make is setting the right sale price. Many homeowners dream of fetching a top-dollar offer for their property, but pricing your home too high can lead to a long and frustrating selling process. On the other hand, pricing it too low might leave money on the table. Striking the right balance is key, and here’s why setting a realistic sale price for your home is so important.
1. Attracting the Right Buyers
The first few weeks of your home being on the market are critical. During this period, your property will get the most attention from prospective buyers and agents. If your home is priced too high, it may deter buyers who otherwise would be interested. Buyers often compare homes in similar price ranges, so if your price seems unreasonable compared to others in the area, your listing might be skipped over.
Pricing your home realistically ensures you attract serious buyers who are in the market for properties within your price range. It increases the likelihood of receiving offers and prevents your home from lingering on the market.
2. Avoiding Prolonged Time on the Market
Overpricing your home can result in it sitting on the market for an extended period, which can raise red flags for buyers. A property that’s been listed for too long can make potential buyers wonder why it hasn’t sold—is there something wrong with it?
Eventually, after little interest, you might have to reduce the price. Multiple price reductions over time can give buyers the impression that you’re desperate to sell, and they might submit lower offers than they otherwise would have. Setting the right price from the beginning helps avoid this situation, positioning your home for a quicker sale.
3. Maximising Offers Through Competition
When a home is priced realistically, it’s more likely to generate interest from multiple buyers. This can lead to competitive offers, potentially driving the final sale price above the original asking price. The opposite happens with an overpriced home. Fewer buyers will be interested, and you might not receive any offers at all.
A well-priced home can spark a bidding war, which benefits you, the seller, and maximizes your profit. Buyers feel more confident in making offers when they believe the price is fair and competitive, encouraging them to act quickly.
4. Understanding the Market Value
The sale price of your home should reflect its true market value. Market value is determined by various factors, including location, size, condition, and comparable recent sales in your area. A thorough understanding of these comparables is essential. What have similar homes in your neighbourhood recently sold for? How long were they on the market? What condition were they in?
A realistic price not only takes your needs into account but also considers what buyers are actually willing to pay. Overestimating your home’s value may result in disappointment, while underestimating it can lead to financial losses. Working with a real estate agent who understands local market trends can help you determine an accurate and realistic price.
5. It’s Not like Buying a Kettle!
Setting the price of a home isn’t as simple as buying a kettle! When you buy a kettle, you know exactly what you’re getting – a shiny appliance to make your morning tea. The price tag is clear, and whether you like it or not, the decision is straightforward. Homes, on the other hand, are a whole different ball game. You can’t just slap a price on them and that’s it.
When it comes to property, the definition of price is what someone is willing to pay.
With a house, you’ve got location, size, condition, and market trends to consider – factors that are a bit more complicated than whether your kettle has a cool touch handle. And while a kettle might set you back £30, a mispriced home could cost you thousands or leave you stuck waiting for the right buyer.
6. The Mortgage Valuation
Even if you find a buyer willing to pay a higher price for your home, their lender will likely require a mortgage valuation. If this comes in lower than the agreed sale price, the deal could fall through, or the buyer might ask you to lower the price.
Setting a realistic price from the beginning helps avoid these issues. It reduces the risk of a low mortgage valuation derailing your sale, ensuring a smoother transaction process.
7. The Impact on Your Moving Timeline
If you’re selling your home to buy another property, setting a realistic sale price becomes even more important. Overpricing your home can delay the sale, which in turn can affect your ability to move forward with purchasing your next home. If you’re under contract to buy a new property, delays in selling your current home could result in losing that opportunity.
A realistic price ensures that your home is more likely to sell within your desired timeframe, allowing you to move forward with your plans without unnecessary stress.
8. Trusting Professional Advice
While it’s natural for homeowners to want to maximise their sale price, it’s essential to trust the advice of an experienced property professional. An experienced agent will use market data, comparable sales, and knowledge of local trends to suggest a realistic and competitive sale price. Their goal is to help you sell your home at the best possible price within a reasonable timeframe.
Some agents will often suggest a high price to ‘test the market’ with a view to winning the instruction and perhaps reducing the price down the line. However, this is not a good practice. It is often done to increase ‘market share’ so that agents can show their ‘best market share’ pie chart to prospective vendors at market appraisals to impress them!
It’s important to keep emotions out of the pricing decision. Many homeowners have sentimental value attached to their properties, which can cloud judgment. A professional, objective perspective will help ensure the price is rooted in market reality.
9. Adapting to Changing Market Conditions
The property market is dynamic and can shift due to factors such as economic changes, interest rates, and local demand. Setting a realistic sale price also means being flexible and responsive to market trends. If the market cools after you list your home, you may need to adjust your price to remain competitive.
Monitoring the market and staying informed will help you make data-driven decisions, allowing you to price your home accurately and make adjustments when necessary.
10. Portal Behaviour
As around 90% of property searches are now started using the internet and, more specifically, property portals (Rightmove, Zoopla and On The Market), it is important to understand the behaviours of potential buyers.
Buyers often use property alerts to notify them of new properties coming on the market within their specific parameters – area, price, bedrooms etc. This means that potential buyers will see the majority of new listings in the first 48 – 72 hours of a property being added to a property portal. If a property is deemed overpriced, it will often be dismissed completely at this stage rather than ‘saved’ for a later day.
Back to the issue of price reductions. Price reductions on properties for sale are very common and there are a number of reasons why market prices are lowered. However, it is important to look at price reductions from a buyers perception who won’t necessarily know the reason for the reduction.
The more times a price is reduced, the greater chance of it attracting the “there must be something wrong with it“ label – rightly or wrongly, this is the general perception.
Final Thoughts
Setting a realistic sale price for your home is essential for attracting buyers, ensuring a smooth sale process, and maximizing your return on investment. Overpricing can deter buyers and prolong the sale, while underpricing may result in lost profits. By carefully evaluating the market, trusting professional advice, and being mindful of appraisals and market trends, you can position your home to sell quickly and at a fair price.
Ultimately, a realistic price reflects the true value of your property and gives you the best chance for a successful sale. If you’re unsure about the right price for your home, consult with an agent who can provide a comprehensive analysis of your local market and guide you through the pricing process – in other words, me!
