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3 Pricing Mistakes That Can Doom Your Listings

Agents have many factors to consider when pricing a listing. Along with the obvious market conditions, they also have their seller’s needs to consider: they need to help their client receive the highest possible return on their investment.

Given all those demands, it is important that agents understand how to price a listing strategically. Here are three common pricing mistakes to avoid:

1. Inadequate Research – We’ll start with the most obvious pricing mistake, which is not conducting the proper research before listing the property on the market. Sure, any agent can log into the MLS, run a couple searches and see what nearby properties sold for, but that hardly provides the full story behind a home’s value. In addition, you should be diving into the particulars: at what price did homes of a similar square footage sell? How did the number of bedrooms and bathrooms affect price? And what about certain architectural details? All should be carefully considered before settling on a price.

2. Home Improvement Pricing – Many people think that home improvement projects always add to a listing’s value, but the research, courtesy of Remodeling magazine’s “Cost vs. Value” report, shows that this isn’t always the case. For instance, while fiberglass attic insulation adds $1,482 value to a home (above its $1,268 cost), a basement remodel only recoups 70.4 percent of its average $68,490 price tag. Similarly, major kitchen remodels recoup 64.9 percent of their $59,999 price, and bathroom remodels are not much better at 65.7 percent of their $17,908 cost.

Home improvement does not automatically equal a higher sales price, and it is essential that your clients understand that reality.

3. Unconventional Pricing – There are many homes out there for sale, and all agents are trying to distinguish their own listings. Pricing a home on unconventional terms, however, is not a good way to stand out, especially in the modern age of syndication sites. Love them or hate them, millions of consumers use the Trulia and Zillow websites on a daily basis, and listings should be priced to show up in those searches. For instance, why price a listing at $305,000 when Trulia’s price range stops at $300,000? That extra $5,000 may seem like a nice cushion, but it could prevent your listing from being seen by many potential buyers.

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