One of the hardest parts for every potential home seller is deciding on pricing. What should you ask? After all, you have to take into account what you paid for it, what you owe, what improvements you’ve made, what your next house is costing, other debt you want to pay off, and what you heard the neighbors got for their house last year. Except, none of those things matters, especially to prospective buyers.
Not only is pricing difficult, it’s risky. Price too high and your lovely home languishes on the market, getting harder to sell the longer you hold out. Price too low and you give up precious cash that buyers would have been willing to pay had you only asked.
One of the best, to-the-point articles we’ve read on these difficulties and their related perils, is this Realtor.com article: If You Don’t Price Your Home Right, You’ll Really Pay, by Beth Braverman. Her 7 common mistakes are spot on and worth your time to read in more detail (no matter how you decide to sell):
- Basing your price on how much you paid.
- Expecting to get reimbursed for renovations.
- Leaving too much room to negotiate down.
- Not shopping your competition.
- Basing your home on a neighbor’s asking price.
- Getting emotionally involved.
- Failing to quickly and decisively reduce.
So what is a seller to do? Giving it your best guess and going it alone is rarely recommended. The traditional option is to seek (and heed!) expert advice from a qualified Realtor® and see what happens. But there’s another option with an entirely different approach to pricing. Let the buyers fight it out and simply sell it to the one who’s willing to pay the most. That’s what happens at a professional real estate auction.
Ultimately, like anything else for sale, the value of your home is whatever the market is willing to pay. Said differently (and perhaps painfully), buyers determine values; not sellers. Sorry. Based on that truth, the only buyer you should engage with is the one who will pay more than the others. Again, that’s what happens at a professional real estate auction.
Assuming the auction marketing is customized to the property and executed expertly, buyers will appear and compete to own. Your guess at a price neither deters nor attracts them. They are simply there to bid until someone outbids them or they outbid everyone else. When the gavel falls, the value is established. It really is that simple.
Worried about pricing your home? Just don’t!