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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