Sellers will make a lot of decisions when it comes to selling their home.  The pricing of a home is probably the most important decision.  Pricing is rarely as simple as looking at comparable properties and pricing your home accordingly.  Pricing should factor in the sellers motivation, the market trends and potential buyer’s highest and best use of the property.

First, pricing should be considered in the context of why the seller is actually selling the home.  Sellers looking to cash out of an investment to move to a new investment area with better growth potential have the option of refinancing.  Rather then price a home on the lower end of the market; it would be an excellent opportunity to test the higher end because of the refinance alternative.  On the other hand, if an investor plans to move across country and would like to liquidate their portfolio locally, it would be smarter to price the property more conservatively.  This places a higher value on a quick, sure-fire sale and hopefully ensures you a worry-free move.  By understanding your alternative to selling your property, you can make a smarter pricing decision.

Second, pricing should factor in market trends.  Many times realtors will show you comparable properties currently on the market and suggest you price your property at the midpoint.  Pricing is far more art than science.  Before considering comparables, you should have a view on the market pricing trend.  If the market is strong, shoot for a price on the higher end of the neighborhood and let the market catch up to you.  Aggressive pricing is a good strategy in a strong market.  Conversely, a declining market is the seller’s enemy.  In this market it is often wise to price your home 2-5% below the comparable average.  Many times sellers will begin lowering their prices in a race to attract buyers, often times well after the market has passed them by.  Avoid this problem altogether by sacrificing a small profit for a quick sale.  Chasing the market will ultimately result in you getting far less than the original perceived discount you are offering.

Last, consider the best use for your property.  If you have been using your property as a rental home, but you notice a mix of new home buyers and investors coming to your neighborhood, cater to the buyer group that will pay the most money.  While this seems obvious, it is often not an easy task.  Investors traditionally want a blank canvas to work with, while new home buyers are drawn to homes with a bit of character.  If you notice investors paying 5-10% more, remove all the furniture, paint the walls white and provide pertinent information on the rental market in your area.  If new home buyers seem to be paying a premium, consider a simply staged home with a few local touches.  Every little detail adds that much more to the offer price you receive.

Pricing is far more than looking at comparables.  Realtors are out to close a transaction, so consider your motivation and drive the pricing process.  Ultimately, it’s your bottom line.