How to Determine the Listing Price of Your Home

Determining the real market value of a home is an art. What an able and willing buyer and seller will agree to in an arm's length transaction is often unclear until the end of the process. Pricing your home too low may result in a fast sell, but it doesn’t guarantee multiple offers and you might leave money on the table. 

If you price your home too high, you may see months pass by without a transaction and end up selling for less than if you had started at a more reasonable price within your range. If you’ve priced your house right, you should see steady action and multiple showings from buyers over the span of a several weeks.

How Real Estate Agents Help Price Your Home

Relying on a real estate agent is a good and simple way to ensure your listing price is as close to the real market value of your home as possible. An agent will usually conduct a comparable market analysis by looking at recent selling prices of similar homes in the neighborhood to get a feel for what the market will bear. 

An agent also brings a sense of how many similar properties are on the market. If there are many, they might advise to slightly lower the price to gain a competitive edge. There is a clear incentive for real estate agents to sell the home for the highest possible figure because their commissions are tied to the final sales price, so you don’t have to worry about them talking you into asking for less than what your house is worth.

Once you have determined the value of your home, there are a few pricing strategies you can employ to get the most out of your sale.

Real Estate Listing Pricing Strategies

1. Round Number

The round number pricing strategy is the closest whole number to what the seller views as the fair market value (i.e., $400,000). This strategy is best at attracting listing views, as a home listed for $400,000 would appear in both $350,000-$400,000 and $400,000-$450,000 search results. The drawback to this strategy is that the figure might seem like a ballpark estimate, signaling that the seller doesn't really know what the value is.

2. Precise Price

This strategy uses an exact number for the listing price, such as $387,774. Pricing like this will grab the buyer's attention and cause them to pause. Pricing this way shows confidence and indicates the price is less negotiable, and as a result, the buyer is likely to assume the price accurately reflects the property value. This strategy is not always recommended though, as it calls the buyer to wonder why the seller chose that figure. This usually leads to further curiosity about the seller, which is unfavorable as the goal is to showcase the property, not the seller.

3. Just Below

Also known as “charm” pricing, this is when a seller lists the price for just a tad less than the nearest round number. With this pricing strategy, the goal is to make it stick in the buyers head that they’re getting a bargain. There’s a psychology to it. Sellers who use this strategy tend to get more money for their homes than those who don’t, almost 2% more on average compared to the other two methods. When your house is worth a few hundred thousand dollars, 2% can add up to quite a bit.

Additional Tips for Listing Your Home

• Separate your home from your investment; don’t let emotions sabotage your sale. If you are too sentimentally attached to your home, you may reject a good price or fail to negotiate with a serious buyer.
• Don’t list your home until you are serious about selling and have considered the emotional process. Make sure you have found a place to go once it sells, you have undertaken cleaning and decluttering, and you are prepared for staging.
• Appeal to mobile buyers; majority of home searches begin on smartphones and tablets.
• Make the best impression online. This includes having a complete description, photos, and accurate data. If any of these are lacking it will turn off buyers, and they may never return to your listing.
• If you’re trying for the higher end of the price range, agree with your agent that after a set amount of time you’ll drop the price.

Are there any listing price strategies we missed? Have you found success employing any of these strategies? Let us know in the comments!