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Why It’s Critical To Price Your House Right
When you make a move, you want to sell your house for the highest price possible. That might be why many homeowners are eager to list in today’s sellers’ market. After all, with record-low inventory and high buyer demand, many homes are selling for more than asking price. Data from the National Association of Realtors (NAR) shows 46% of homes are selling above list price today.
But even in a market like we have now, working with an agent to set the right asking price is critical, as pricing it too high or too low could have a negative impact on your final sale. Here’s why.
Pricing Your House Right Is Crucial Even in a Sellers’ Market
The price you set for your house sends a message to potential buyers. Price it too low and you might raise questions about your home’s condition or lead buyers to assume something is wrong with the property. Not to mention, you could leave money on the table, which decreases your future buying power if you undervalue your house.
On the other hand, price too high and you run the risk of deterring buyers. When that happens, you may have to do a price drop to try to re-ignite interest in your house when it sits on the market for a while. But be aware that a price drop can be seen as a red flag for some buyers who will wonder why the price was reduced and what that means about the home.
In other words, think of pricing your home as a target. Your goal is to aim directly for the center – not too high, not too low, but right at market value. Pricing your house fairly based on market conditions increases the chance you’ll have more buyers who are interested in purchasing it. That makes it more likely you’ll see a bidding war, too. And when a bidding war happens, you’ll likely get an even higher final sale price. Plus, when homes are priced right, they tend to sell quickly.
To get a look into the potential downsides of over or underpricing your house and the perks that come with pricing it at market value, see the chart below:
Lean on a Professional’s Expertise To Price Your House Right
There are several factors that go into pricing your house and balancing them is the key. That’s why it’s important to lean on an expert real estate advisor when you’re ready to move. A local real estate advisor is knowledgeable about:
- The value of homes in your neighborhood
- The current demand for houses in today’s market
- The condition of your house and how it affects the value
A real estate professional will balance these factors to make sure the price of your house makes the best first impression and gives you the greatest return on your investment in the end.
Bottom Line
Even in a sellers’ market, pricing your house right is critical. Don’t rely on guesswork.
Supply and Demand in Today’s Market
![Supply and Demand in Today’s Market [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2022/03/03164955/20220304-MEM-1046x2586.png)
Some Highlights
- Today’s housing market is the direct result of low supply and high buyer demand. Here’s what that means for you and your plans to buy or sell.
- For buyers, expect competition, be ready to move fast, and be prepared to submit your strongest offer. For sellers, know your house will be the center of attention and that it’ll likely sell quickly and get multiple offers.
Are Home Prices Continuing To Rise?
Many analysts projected home price appreciation would slow dramatically in the fall of 2021 and then continue to soften throughout 2022. So far, that hasn’t happened. The major price indices are all revealing ongoing double-digit price appreciation. Here’s a look at their reports on year-over-year price appreciation for December:
- Federal Housing Finance Agency (FHFA): 17.6%
- S&P Case-Shiller: 18.8%
- CoreLogic: 18.5%
To show that they’re not seeing signs of softening, here’s a graph that gives the progression of all three indices for each month of 2021.
As the graph above reveals, last year, home price appreciation accelerated dramatically from January to July according to all three indices. Then, it began to decelerate in August when prices appreciated at a slower pace, but it didn’t decline. Many thought that would be the beginning of a rapid slowdown in the level of home price appreciation, but as the data shows, that wasn’t the case. Instead, prices began to level off for a few months before two of the three indices saw appreciation re-accelerate again in December.
To clarify, deceleration is not the same as depreciation. Acceleration means prices rise at a greater year-over-year pace than the previous month. Deceleration means home values continue to rise but at a slower pace of year-over-year appreciation. Depreciation means prices drop below current values. No one is forecasting that to happen.
In fact, the FHFA revealed that price appreciation accelerated in December in six of the nine regions it tracks. Case Shiller showed that appreciation accelerated in 15 of the 20 metros they report on. As Selma Hepp, Deputy Chief Economist at CoreLogic, explains:
“After some signs of slowing home price growth . . . monthly price growth re-accelerated again, indicating home buyers have not yet thrown in the towel.”
What Does This Mean for You?
Whether you’re a first-time purchaser or someone looking to sell your current house and buy a home that better fits your needs, waiting to decide what to do will cost you in two ways:
- Mortgage rates are forecast to rise this year.
- Home prices should continue to appreciate at double-digit levels for some time.
If you wait, rising mortgage rates and high home price appreciation will have a dramatic impact on your monthly mortgage payment.
Bottom Line
Maybe the best thing to do is listen to the advice of Len Kiefer, Deputy Chief Economist at Freddie Mac:
“If you’re thinking about waiting until next year and that maybe rates are higher, but you’ll get a deal on prices – well that’s risky. It may be more advantageous to purchase this year relative to waiting until 2023 at this time.”
An Expert Advisor Will Give You the Best Advice in Today’s Market
Having an experienced guide coaching you through the process of buying or selling a home is important in a normal market – but today’s market is far from normal. As a result, an expert real estate advisor isn’t just good to have by your side, they’re essential.
Today’s housing market is full of extremes. Experts project mortgage rates will continue to rise this year, and that’s driving significant demand for homes as buyers want to make their purchases before rates climb even higher. At the same time, an absence of sellers is leading to record-low housing inventory. This imbalance in supply and demand is creating bidding wars and driving home price appreciation as well as considerable gains in home equity.
These market conditions can feel overwhelming, but you don’t have to go at it alone. Having a trusted expert to coach you through the process of buying or selling a home gives you clarity and confidence through each step.
Here are just a few of the ways a real estate expert is invaluable:
Contracts – Agents help with the disclosures and contracts necessary in today’s heavily regulated environment.
Experience – In an unprecedented market, experience is crucial. Real estate professionals know the entire sales process, including how it’s changed over the past two years.
Negotiations – Your real estate advisor acts as a buffer in negotiations with all parties throughout the entire transaction and advocates for your best interests.
Education – Knowledge is power in today’s market, and your advisor will simply and effectively explain market conditions and translate what they mean for you.
Pricing – Finally, a real estate professional understands today’s real estate values when setting the price of your home or helping you make an offer to purchase one.
A real estate agent is a crucial guide through this unprecedented market, but not all agents are created equal. A true expert can carefully walk you through the whole real estate process, look out for your unique needs, and advise you on the best ways to achieve success. Finding an expert real estate advisor – not just any agent – should be your top priority when you’re ready to buy or sell a home.
What’s the key to choosing the right expert?
It starts with trust. You’ll want to know you can trust the advice they’re giving you, so you need to make sure you’re connected with a true professional. No one can provide perfect advice because it’s impossible to know exactly what’s going to happen at every turn – especially in today’s unique market. But a true professional can give you the best possible advice based on the information and situation at hand. They’ll help you make the necessary adjustments along the way, advocate for you throughout the process, and coach you on the essential knowledge you need to make confident decisions. That’s exactly what you want and deserve.
Bottom Line
It’s critical to have an expert on your side who’s well versed in navigating today’s rapidly changing market. If you’re planning to buy or sell a home this year, be sure you have a real estate professional on your side to give you the best advice and guide you along the way.
