So, you're ready to sell your Hudson Valley home but you're struggling on where to price the house. Your Realtor has hopefully given you their opinion on where they think that the house is worth, and now you're thinking, well, should I ask for more? Especially in a seller's market? Can't I get away with asking for more than my house is really worth when there's such low inventory?
These are all valid questions, and let's go through them, because you aren't wrong for wanting to get the most money for your home. Whether you're selling your home in Beacon, Poughkeepsie, Cold Spring, Wappingers, or anywhere in the world really, where you price your home matters, and can cost or make you quite a lot of money. Now, I won't be covering how to get the price of your home, that's for another day, but I'll chat briefly about how you should think about pricing it once you've got a range of value.
The most common knee-jerk reaction in a seller's market is to price a property for the highest you can possibly get away with that would still generate interest. Even in a buyer's market, a common method of thinking is "if my house is worth 450K I should price it at 500K because people are always going to try to lowball me, so I'd rather price higher knowing that." There is some validity to that thinking, yes, there will always be people who want to lowball, it's human nature to try and negotiate. But that's only going to happen if you set yourself up for that situation by pricing your home above what it's worth.
So, should you list it exactly at what you think that the house is worth? Give people a fair price and get some interest going on the house? Not a bad strategy either, but not what I would suggest as the best strategy to make you the most money.
Think about it for a minute, what's going to make you the most money when you're selling a product or a service? What drives prices up? Demand. When demand is high, that's when you get the most money. So...that being said how do you create the most demand on your house? The answer is, pricing strategically. And that means, pricing slightly below what your house is worth.
What? Why would anyone sell their house for under what it's worth? Well, you're not selling for that price, you're advertising that price with the knowledge that you will generate loads of interest and create a bidding war on your property. That is what will get you the most money. When it's you versus one other buyer, you're not really in that strong of a negotiating standpoint. However, when multiple buyers have interest in the house, they're no longer negotiating against you, they're negotiating against each other.
Let's look at this in a hypothetical in each of these situations. Let's say your house is worth somewhere in the 450K range, ballpark, and you won't sell for under 450K.
Now, let's imagine you took the route of pricing high knowing that someone will lowball you and you list at 500K. You sit on the market for more than 2-3 months because you've priced yourself out of the market that your buyers are in, and you are offering less than what buyers in the 500K range are looking for. So you do a price reduction or two down to 475K. A buyer comes along and likes the house, but they see you've been sitting on the market for a while and their realtor suggests offering under asking, lowballing. They offer 435K. You counter 460K. They counter 440K. You counter at 450K. They ask to meet in the middle at 445K and you accept. Then they find something wrong with the electrical panel and high radon during inspections and ask for a 5K credit, which you agree to because you need to sell and no one else is interested. You've priced yourself at 500K but essentially are walking away with 440K, 60K less than what you advertised.
This time, let's assume you just price at 450K, right where you want. You get some interest and you actually get 2 buyers who make offers on the house after about a week goes by. One of them is under asking and one of them is at asking. Your Realtor negotiates and gets one of them to come up over asking by 5K to 455K. During the process, the house only appraises for 450K, and the buyer said that they're not going to come up with the extra money, and 5K isn't worth it for you to go all the way back to square one so you just take 450K and call it a day. You got what you wanted.
Finally let's say that you price the home at 439K, decently under what you wanted, but this time you attract a ton of buyers who see the home as a great deal. Within the first week your schedule is filled with showings on the house and you have 5+ offers to choose from. One or two of them is a lowball below asking, but the majority of them are above asking, some go to 450K, some go higher to 460K, you even get one stellar offer of 475K. The buyers also said that they will cover the appraisal difference up to 10K, so if it under appraises, they'll pay the difference up to 10K. They also don't want to lose the house and know that they're competing against others so they say that the inspections are for informational purposes only, they wont negotiate down. Let's even say that again, the house only appraises for 450K, well, the buyers bring the extra 10K to closing and you get 460K, which is much more than you expected to get.
These situations I've explained aren't carefully tailored so that they fit the narrative that I'm trying to push. They're each situations that I or my clients have been in before, and I can say that every time, my clients are the happiest when they have a bidding war and get the most money for their property.
So, while it may hurt, you should price your home slightly under what it's worth in order to garner the most interest in your house and get the buyers to negotiate for you and not against you.
Thanks for listening,
Anthony Ruperto
Licensed Real Estate Salesperson
J Philip Real Estate, LLC.
914.494.0141
Anthony@JPhilip.net