The Orlando real estate market is very dynamic, and, with more companies cropping-up and established businesses growing, more people are relocating to the central Florida area. The economic cycle allows local theme parks, corporations, and even small and medium sized businesses to expand, which creates a need for more employees. That has a direct effect on the real estate market and home prices are steadily rising. If you are thinking about relocating to Orlando, or, already live here and want to buy a recently built home or new construction, it’s important that you price your current home right.
Which Home Pricing Strategy Works Best?
The age-old question is in a very common conundrum: price it too low and you won’t get a good return on investment, price it too high and it will scare buyers away. Putting a listing price on a home, or asking price, isn’t a straightforward proposition. Sure, you have to base it on comparable properties that have recently sold, account for the trajectory of the neighborhood, factor-in its overall condition, and, take into consideration the local market, but, these aren’t the only components.
Pricing your home is a science. The science is choosing the right price at which your home will sell quickly. How do you do that? By analyzing your local market conditions and where your home fits in the spectrum. The only way your home will sell at the highest price possible is if your buyer agrees to your home’s value. To best determine market value, you have three important tools: CMA’s, appraisals, and your Realtor’s knowledge of the market. —Realty Times
For instance, if you increased the livable square footage with an addition, that can also increase the home’s value. However, if it came at the expense of converting a garage or taking away yard space, it might not gain a good ROI. Another thing to consider is that while home improvements generally do contribute to a home’s function and style, they don’t necessarily increase the listing price. This can be a reality because of the neighborhood or just the fact that said improvement isn’t a selling feature. In addition to all of this, your personal situation will also be part of your pricing strategy. When you are ready to put your home on the market for sale, here are some pricing strategies to consider:
- Pricing a home just above market value. Two years ago, the National Association of Realtors surveyed its members and found that 2 percent of homes sold 12 percent above their listing price. However, the market is dynamic and what happened a couple of years ago is no guarantee of what’s smart today. The reasoning for pricing a home just above market value is that it creates room for negotiation. Keep in mind, though, this works best when inventory is low and sellers are largely favored by the local market.
- Pricing a home just below market value. The same study revealed that 3 percent of homes sold for below 23 percent of their asking price. Of course, when a seller prices a home under market value, it’s supposed to create a lot of interest and attract several serious buyers. This strategy, too, has a downside — it gives the impression the seller is desperate or not confident about their pricing. In the end, it could cause a home to linger on the market longer than it would if it was priced at market value.
- Setting an exact price rather than a round-number. One of the most effective strategies is to set a price that’s an exact number rather than a round number. Michael Seiler, a professor of real estate and finance states that research shows pricing a home at a specific number sell faster and with less haggle than those set at a round-number. For instance, pricing a home at $247,565 is better than pricing it at $247,000 or $248,000.
Another strategy is to set the price at market value or just under market value, but not accepting offers until a specific time in order to create a bidding war. This can work in a seller’s market but can also backfire in the same scenario if buyers realize the goal is to create said bidding war.