When it comes to selling your home quickly and (hopefully) for a sweet profit, setting the right asking price from the get-go is key to your success. Set the price too high? The place will stagnate on the market and force you into price cuts, possibly multiple ones. Set it too low? You're kissing off money that could've gone into your pocket.
So how do you hit that sweet spot of an asking price? Well, for starters, avoid these common mistakes!
Mistake No. 1: Basing your price on how much you paid
Even in lackluster markets, homeowners can't help but hope they'll make a big profit when they sell -- and that's why many nudge their price ever higher, regardless of real-world demand. But the harsh reality is this: Buyers could care less how much you paid. All they care about is getting the best deal possible in today's market -- and if you aren't willing to accept that and swallow a potential loss, they'll take their money elsewhere. Another thing buyers care not a whit about: how much you owe on the mortgage. So, sadly, that shouldn't factor into your asking price, either. It's a cruel world. Deal with it.
Mistake No. 2: Expecting to get reimbursed for renovations
So you overhauled the kitchen or put a swimming pool out back, and it cost you a bundle. It's logical to think that you can pass that entire expense along to buyers who'll be enjoying the fruits of your labors. Right? Well, not exactly. Remodeling projects offer an average 62% return on investment, according to Remodeling magazine, which is why it's a good idea to skip major cosmetic remodels right before a sale. This is particularly true if you've got wild or exorbitant tastes that buyers might not share.
"Some people have very expensive taste when they put in renovations, but the neighborhood doesn't warrant the price," says Lauren Sheehan, an agent with Windermere Real Estate in Portland, OR.
Mistake No. 3: Leaving too much room to negotiate down
The days of extreme lowball offers have gone the way of fax machines, Atkins diet plans, and jeggings. So pricing your property too high -- thinking you'll leave prospects with plenty of room to negotiate -- may quickly scare away legitimate offers. Plus, buyers who search for homes online (translation: pretty much all of them) often screen by price, so they may not even see an overpriced property.
Instead, aim to price your property at or just slightly below the going rate. Today's buyers are highly informed, so if they sense they're getting a deal, they're likely to bid up a property that's slightly underpriced, especially in areas with low inventory.
Mistake No. 4: Not shopping your competition
While you might assume your home is more or less the same as others on your block, small differences can add up to big discrepancies in price. That extra half-bath in the home next door or that fireplace in your living room should all be taken into account. So spend some time perusing local listings and attending open houses to figure out how your home stacks up.
"Home sellers need to understand the positives and negatives of their house and price accordingly," says Scott Tamkin, an agent with Nest Realtors at John Aaroe Group in Los Angeles. That said, don't make the next mistake…
Mistake No. 5: Basing your home on a neighbor's asking price
Just because your neighbor is asking for a certain price on his property doesn't mean he's going to get it. And it may not be due to delusion, either.
"Your neighbor may not really need to sell and may be less motivated," says Danielle Moy, a real estate agent with Coldwell Banker in Chicago. "Those properties may sit on the market for a long time."
A far better benchmark if you want to sell your home is to look at the prices on recently closed sales. These are available through a comparative market analysis from a Realtor and will give you a better picture of where home values are going in your neighborhood.
Mistake No. 6: Getting emotionally involved
All sellers think their home is worth more than it is. All of them. Just because you raised a beautiful family in your house doesn't mean potential buyers will see themselves doing the same, or that they'll pay a premium for the opportunity to do so.
Mistake No. 7: Failing to quickly and decisively reduce
If your home goes several weeks without an offer, it's likely priced too high, particularly if homes in your area have a relatively short average days on market. Rather than making a small price cut and risking having to do it again in a subsequent month (while your listing gets older and staler), make a large and decisive price cut -- $10,000 or more -- that will attract buyer attention and show you're serious about selling.