There's a Lot More to Pricing Your Home Than You May Think

Whether you overestimate or underestimate your home's value, it may cost you money in the long run.

What happens when you overprice your home? Unless you plan on selling when we are in an extreme seller's market, an overpriced home won't sell.

Overpriced homes end up sitting on the market and the poor homeowner keeps dropping the price, hoping for a nibble. After a series of price reductions, the home becomes stigmatized, home buyers think there's something wrong with it, and most won't even bother looking at it.

Consider this: According to a study performed by MIT's Center for eBusiness, homes that remained on the market longer than average suffer an average $32,000 reduction in the eventual sales price.

If you underprice your home, you'll get a quick sale, but you may end up leaving thousands of dollars on the table. Like Goldilocks, it's important to find that just right price before the home hits the real estate market.

The Sweet Spot

So, what is the sweet spot when it comes to pricing a home for sale? Here's a clue: Market value is based not on what your neighbors are asking for their homes, but on the sales price of the homes sold in your neighborhood.

While there are minor factors to be considered when pricing a home, there are actually four major factors to consider as well. The state of the current housing market and whether it favors buyers or sellers, the location and age of the home, and the condition of the home compared to similar homes.

This is why choosing the right listing agent is so crucial. It takes experience to evaluate a home, something that comes from years of doing it.