What do you think you could do to make your home sell faster? Maybe you could put on a fresh coat of paint. Or, maybe you could get the front yard landscaped and really raise the curb appeal. Or maybe you should even get the house professionally staged, so buyers can "see" themselves living there.
However, there is one thing you can do that matters more to a quick sale than all of these things combined: pricing your house right.
Why getting it right the first time matters so much
Studies have shown that a home's first two weeks on the market are the most crucial to the success of the sale. This is the time period when the house will get the most attention from Internet searches and buyers' agents, so it's important to make a good first impression.
If the home is not priced reasonably, many buyers will simply move on. Homebuyers generally have a set price range in mind, so you really need to target those buyers who can afford to spend what your house is really worth right away.
One common, and incorrect, strategy is to set the price on the high end (say, 20% more than you expect to get), and progressively lower it over time. Unfortunately, this can end up working against you. For one, over-pricing your home is a complete waste of the peak of attention on your home.
Also, in pretty much every real estate listing service, the length of time your home has been on the market is clearly displayed. Homes that have sat on the market for a long time tend to raise red flags for buyers, who instinctively want to know why the home hasn't sold yet. Is it overpriced? Is there something else wrong with it? Buyers often look at homes that have sat on the market as an excuse to lowball the seller.
According to one report, homes that sold within their first week on the market fetched an average of about 2% over list price, while homes that sat on the market for four months sold for more than 11% below their original list price. So, getting it right from the start can make a tremendous difference.
Leave emotion out of it
When figuring out how to price your home, there are several factors you need to take into consideration. Your own thoughts on how much someone else should pay for the house should not be part of the equation.
Many people, especially those who bought before the financial crisis, think their home is worth more than it actually is. This is also common among people who have lived in their homes for a long time. They say things like, "I've owned this house for 40 years and raised my kids here. I'm not just going to give it away!"
Or, sellers will attempt to price their house based on what they paid for it, or how much money they invested in repairs and renovations.
Well, buyers really don't care about your personal attachments to the house, or how much money you've sunk into it. They do, however, care about getting a fair price on a home.
So, how do you price it right?
There are several things that can give you a good idea of how much your home is really worth. Estimates from websites like Zillow are a decent place to start, but should really just be used as a starting point.
One of the best ways to analyze your home's value is to check out comparable recent sales in your area (you can also find these on Zillow). Look for homes sold in the past few months with similar square footage that are close to your home. Take note of the selling price, and the condition of each home. The average of these comparable sale prices should give you a pretty good idea of what you can realistically expect.
And, be sure to adjust a little for the condition of your home, or if there are any repairs that the new owner is going to need (or want) to do. For instance, if the roof is 30 years old, it's likely that a buyer is going to want some consideration of that fact.
There are several other tricks to help you price your home right, and Zillow has a pretty good list here. For example, pricing a home at $299,000 instead of $300,000 can help psychologically influence buyers to come take a look.
Defer to the experts
Or better yet, talk to a real estate professional, who really knows the local market. It shouldn't be too tough to find a local real estate agent who specializes in helping sellers.
Once you've hired a professional, listen to them. One of the biggest reasons to hire a professional is to get a neutral party, who is just looking at the sale of your home from a dollars and cents standpoint. And, this person will know a lot more about how much homes like yours are selling for than you do. So, if they tell you that you can reasonably expect $300,000 for your home, they are probably not very far off.
Ultimately, whoever you hire works for you and will list your home for whatever you tell them to. If you don't mind your house lingering on the market, by all means go ahead and list it for whatever you want and hope for the best. If time is a factor and you want a quick sale, the best thing is to list your home for a realistic selling price right from the start.
Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends Zillow. The Motley Fool owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.