When it comes time to sell your home, the one thing on everyone’s mind is the listing price. The listing price is one of the biggest decisions you and your real estate agent can make. Working with an experienced real estate agent, they will give you a calculated price, though the conversation can often go beyond strategic pricing.
Listing prices are not “one size fits all”. Just because the house next door sold for $950,000 does not mean yours will, nor does it mean your house is worth that. To give you a better idea of the importance of listing prices, let’s break down some of the most common myths surrounding them.
Myth #1: If a home estimate tool suggests your house is worth more than your real estate agent suggests go with the estimate tool.
Fact #1: Home estimate tools are a great starting point to get a ballpark of what your home is worth from a geographical location. Home estimate tools cannot assess your house physically but only compare other recently sold homes nearby, your location and basic information like how many beds and baths you have. Only a real estate agent or a home appraiser can give you an accurate opinion of the value of your house by analyzing all of the factors surrounding your home, both qualitative and quantitative!
If you are interested in more information about appraisals and what they are based on, you can read more on our blog post here.
Myth #2: Overprice your home to leave more room for negotiations.
Fact #2: To negotiate, you need offers, and you will not get offers if your house is overpriced. Buyers and their agents will steer clear of properties with outrageous listing prices. They will either wait until the price is reduced or look somewhere else.
Myth #3: You can add the costs of all renovations to the listing price.
Fact #3: If you have spent a couple of thousand dollars on new renovations, it’s understandable why you might feel entitled to getting that money back from new buyers. After all, you did the hard work. However, just because you put the money into the house doesn’t mean you will get it back.
If you are thinking about renovating before you sell, please speak to your real estate agent about what areas of the house need the most attention and which areas are fine the way they are.
Myth #4: Real estate agents want to overprice the house to get a bigger commission.
Fact #4: Every seasoned real estate agent understands this tactic does not work in their favour. As mentioned in myth #2, overpricing a house usually backfires on the seller and the agent! An agent’s commission is typically 2.5% of the selling price, and without showings, offers or interests, an agent could lose a lot of time, energy and money on a house that stays on the market for a long time. Worse, an agent could potentially lose the listing altogether.
A trusted real estate agent isn’t in this business to scam you. They want to make you the most amount of money in the shortest amount of time. They work very hard for that 2.5%, which then gets distributed to various places. For more information about commissions, you can learn more here.
If you still have questions about listing prices, please get in touch with us. We would be happy to explain how we create home estimates and the various factors that go into them.
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