What to Know About Under and Overpricing Your Home

The familiar rhetoric about location as the primary determinant of North Calgary real estate value is only partially true. Where a property is situated is a part of the equation, but equally important to a home's value are the square footage, the style and the amenities. So, just what should a seller consider when setting a price? And how is it possible to determine that a price is neither too high, nor too low, for current market conditions.

Underpricing can, on occasion and in a hot market, help to promote a bidding war, but it is risky. Overpricing, on the other hand, often means that a home will be on the market longer than it should be, and a seller will often have to reduce the listing price one or more times. Here are some tips about how to set a price that will have buyers competing to make an offer:

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

First, Do the Homework

Being aware of the competition is the best way to evaluate whether the figure you have in mind for any property is realistic or unreasonable. Real estate agents use comparables, a term that assesses the statistics relating to homes that have been listed, sold, and closed within a specific period of time. Local multiple listing services track listing price, sales price, total days on market, and the variables of each property, including square footage, age of the house, type of construction, number of bedrooms and baths, and specific location or subdivision. In addition, the stats will typically have information about assessed value, property taxes and any specific improvements or shortcomings.

It's all valuable information when it comes to pricing a property. The problem, however, is that the statistics only reflect what has already happened; in a stable market, that is good information. However, in a volatile market, statistics from the past six months may have little validity for the next quarter. No crystal ball can predict exactly what price might be reasonable in an extreme seller's market or, conversely, in unusually slow times.

Put Aside Emotion, Rely on Facts

No matter how perfect a house may be for its current owners, sellers must evaluate its strengths and weaknesses in terms of other existing homes in the community. The best way to do that is to visit—in person or via online listings and photographs—other homes that are currently available. Take notes; make lists of enviable features. Study color schemes, furniture arrangement, and the appearance of homes and yards that have appeal.

Seek to emulate the look and feel of spaces that are emotionally satisfying. Consider enlisting the services of a professional stager to present a home in its best possible light and appeal to the broadest possible pool of prospective buyers.

Understand that selling a home is likely to involve some negotiation. Know what your bottom line is and stick to it, but also try to allow some "wiggle room" in the pricing. Know that listing a home with an unreasonably high price is not typically viewed as an invitation to make an offer, but rather as a reason to walk away.

Finally, unless you are fully confident of your ability to navigate the sometimes hazardous path of listing and selling by owner, interview several real estate agents to find one with whom you can develop a rapport and gain a sense of confidence.

Selling a home is acknowledged to be stressful, and the broad experience and expertise of a real estate professional is your best insurance against pricing a home either too low or too high. Selling a home is not the time to be greedy; houses on the market longer than the norm tend to become shopworn. However, in active markets, it is not unusual for well-priced homes to receive multiple offers and sell for more than the asking price.

A good real estate agent can help a home seller find the price for a home.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.