Many home sellers succumb to myths about home pricing that don’t match the reality of the housing market.
I focus primarily on listings and I hear my sellers talk about each of these common pricing myths. There's a lot to consider when pricing your home. The best advice you can receive is from an experienced agent who lists homes every day and is knowledgeable about the local market.
You'll always make money on the sale of a home.
Home sellers shouldn’t always assume they’ll walk away with a profit. The National Association of REALTORS® estimates home prices will increase 5 percent by the end of this year. That said, 23 markets have seen the cost of single-family homes decrease in recent months, NAR reports. Sellers’ return greatly depends on their location and how much they paid for the home when they purchased it.
A high home price will net you more in the end.
Sellers may be tempted to set a higher price to see if they can actually get it. While the payday might sound appealing, you’re actually sacrificing your best marketing time in exchange for the remote possibility that someone will overpay for your home.
Overpricing a home from its initial listing isn’t easily fixed by lowering the price on it, either. Buyers may presume something is wrong with the home if they see it linger on the market or have multiple price reductions.
Setting a low price initially means you won’t make as much money.
Pricing a home on the low end can actually pay off. Low-priced homes tend to prompt greater interest among buyers. That could result in a bidding war, which could increase the home’s price way past the listing price.
Sellers can add renovation costs to the price.
Just because you completed a renovation of your kitchen or outdoor deck does not mean you can recoup every dime of that investment at resale. Some renovations may help you to increase your home’s value. Sellers, however, rarely will recoup the entire cost from a renovation. Sellers, on average, see a 64 percent return on every dollar they spend on home improvements, according to realtor.com®. But the profit can drastically vary by the type of remodeling project.