The List Price Will Either Make or Break You
When selling a New Jersey house, you may be wondering how to price your home effectively. You should be aware that setting the initial list price is one of the most important aspects of selling your New Jersey home. The buyer will inevitably compare the price with everything else in the market. If the list price is set right, it can lead to multiple offers, work in favor of the seller throughout the transaction, and even allow the seller to walk away with the best possible price of the house. However, with a bad list price, the buyer is likely to take advantage, and leave you with lesser money than expected. Additionally, your home will spend more time on the market as a stale listing for months.
In order to correctly decide how to price your home in New Jersey, you must be aware of a buyer’s frame of mind. It is imperative to compare the price to other houses that were sold and take into account the current market, determining whether it is a buyer’s or seller’s market. Also, you must know the type of market, as some strategies will work well in a seller’s market but backfire in a buyer’s market and vice versa.
How to Price Your Home in a New Jersey Buyer’s Market
A buyer’s market typically becomes prominent when many homes are available for purchase. In other words, the supply is relatively high as compared to the current demand. In such a market, homes take a longer time to sell while new listings seem to crop up everywhere. There will also be a higher instance of failed transactions if the sale is not handled carefully on both sides.
When figuring out how to price your home in a buyer’s market, gather a list of comparable sales and data about other houses in your neighborhood. Then it is best to slightly come under the market value or the price estimate determined from comparable sales. The price is also reliant on the comfort level of the seller and the current competition. However, when there is no direct competition for your home, a good rule of thumb is to lower 5% than the current estimated market value. If there is direct competition, for example when your neighbor’s home is up for sale, it will be best to lower the expected price by an amount that will stimulate the next buyer to make an offer on your property, rather than your competition.
Here are few benefits of listing your home at a lower price:
It provides a psychological advantage by playing with the buyer’s inherent desire to save money on their home purchase and yet get a great deal. Considering the lower price tag, buyers will be willing to buy the property even before they see it in person. Moreover, they could be thinking of offering the full price. As real estate pricing remains transparent among the market players, the ‘low price’ will attract multiple buyers. When a good deal pops up in the market, everybody knows it. This, in turn, will stimulate higher than average showings and multiple offers.
Less Time on Market
It lowers the time a house spends on the market. The heightened interest in your home for its reduced price will lower the risk due to similar listings of your competition that are likely to pull the buyers away from your property.
Gain the Upper Hand
It allows you to get the upper hand and command a higher sales price. You are also likely to get multiple offers, owing to increased competition on your property. Such offers will enable you to force people to bid up to their highest and the best, and eventually raise your selling price.
Get Ahead of the Downward Trend
In a downward trending market, you can get ahead of the curve by selling your home at the current value, before it trends even lower. Overpricing a home in a downward trending market has long been a disadvantage, as it keeps you behind the curve and reduces the chances of getting your house sold.
Setting the Price in a New Jersey Seller’s Market
A sellers market exists when the number of homes for sale are far less than the number of buyers. In this case, the demand outweighs the supply. As a result, multiple offers will be the norm while buyers will be driven by the fear of never finding a new home. In such a market, buyers are willing to make offers at or above the asking price. Additionally, they will have a lower hand when it comes to negotiating repair needs or inspection issues. The time a house spends on the market is also significantly reduced unless it is overpriced.
When deciding how to price your home in a seller’s market, it is still possible to overprice a home. However, the chances are quite low, especially if prices are quickly escalating. Therefore, the best way to set the list price in a seller’s market is to evaluate the comparable properties that are currently sold, under contract, or actively listed. The estimated value is determined by the sold properties, while the remaining two types of properties will help determine the best price possible for your property.
In a strong seller’s market, the seller can afford to be a little more liberal when setting the listing price at the higher mark. However, I don’t recommend overdoing it, as it will negatively impact the listing and sale. In any uncertainty with setting the price too high, it is best to stick to the current estimated value or slightly under.
Final Thoughts on Setting the Price
Whether you are selling your home in either a buyer’s or seller’s market, if there are little to no interest and/or showings in the first 2-3 weeks, it is a big sign that the house is overpriced. After following the necessary steps discussed in this guide, you must quickly reevaluate your asking price before it becomes too late to save the listing. When you let your house sit at a high price, the listing is likely to become stale, thus causing it to spend more time on the market or be a target for lowball offers.
Thinking of Selling your New Jersey Home?