Pricing Mistakes Sellers Should Avoid

Pricing Mistakes Sellers Should Avoid
Your clients have a lot of decisions to make when they decide to sell their home, but one of the most important is pricing. Inman News recently identified five of the most common pricing mistakes that sellers make:

1. Pricing to the “unsolds” rather than the “solds”
You’ll want to check out the prices of comparable homes that have sold to get a sense of what the home is probably worth, and also look at the unsold listings on the market to get a sense of the pricing you need to beat. But too many sellers ignore the “solds” and price their home according to the “unsolds”—the listings that are currently languishing on the market.

2. Overvaluing the amenities
Amenities do have value, just not enough to make a big difference in price. Amenities are important because they can change where you are in a price range, but they don’t move you up to the next one.

3. Trying to get full value for improvements
Not only do many sellers overvalue their amenities, but they also tend to overvalue any improvements they’ve made in the home. In most cases, improvements earn back about 60 to 70 percent of what they cost.

4. Pricing based on what the sellers need
Sometimes, sellers make the mistake of pricing according to the next home they want to buy, not the home they own now. Real estate is an open and transparent market, so sellers can’t price their homes according to theirpersonal needs.

5. Falling in love with Automated Valuation Models
Many sellers make the mistake of relying too much on Automated Valuation Models (AVMs). But they need to understand that AVMs were designed to provide quick and easy macro-level valuations for institutional investors who didn’t have the time or ability to do a detailed analysis. They’re not intended to be as accurate as an actual comparative market analysis.

Even if sellers avoid these five mistakes when they’re pricing their home, they can still make a critical mistake afterward: they set their price and forget it. Even in the best of circumstances, the initial home price is a guess. Pricing is both an art and a science, and you never quite know exactly how the market is going to react when you list a home. If the market is telling you something, you should listen.

Source: Inman News April 21, 2016