How to Price Your Home in a Seller's Market
Even though you have the advantage, it's not as easy as it sounds.
It's a big confidence boost to know that you're listing your home in a seller's market. When there's a higher demand for houses than actual listings, the ball is almost always in the seller's court to make a quick sale at a price you're happy with. Even so, deciding how to price your home is an important process you shouldn't skim over. Doing your research and enlisting the expertise of a realtor will help guarantee you can accept an offer you're happy with. Because every house and real estate market are unique, there are a few tactics for how to approach pricing your home in a seller's market, and it's important to consider each one before deciding the one that's best for you and your house.
First, you should do your research to confirm that your house is in fact in a seller's market. Sites like Zillow and Realtor.com have tools that analyze some important factors in your local housing market, such as: How long are homes sitting on the market? If the average is less than 10 days, that's indicative of a strong seller's market. How do sales prices compare to asking prices? If sales prices are trending higher than asking prices, that's another good sign of a seller's market. How are home prices trending over time? A steady increase is also a great sign for sellers. If you're lucky enough to be listing your home in a strong seller's market, it's possible you could receive multiple offers within days, and you might be ready to accept one in a week. But that only happens if you price your house appropriately.
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A seller's market might lead to visions of bidding wars dancing in your head. If you think your home and the market is strong enough to entice a bidding war, you might intentionally list your home 5-10 percent below market value. Multiple offers gives you multiple options as the seller, and lets you accept the offer that represents the best full package for you, whether that's simply the highest price or some combination of price and contingencies. There's risk in doing this though, since financing might fall through if your home is appraised for lower than the accepted offer price. And if your house or the local market aren't as strong as you'd suspected, a low price could present a red flag to potential buyers, making them question why it's listed lower than it presents itself to be valued for.
Given the advantage in the housing market, you might be tempted to go ahead and list your house at a price 5-10 percent higher than market value. If you're actually prepared to accept something closer to market value, a "low" offer using this strategy might be easy to accept. There are also some risks with this approach, though. If it appears that your house is overpriced, it could be ignored and sit on the market longer than you'd like. You could also miss out on potential buyers who've set their budget range below your list price. If you start high, though, and aren't in a hurry to sell, you can always lower your asking price to hopefully reignite interest in your listing.
Meeting in the Middle
It might be hard to not list your house higher than it's valued at when you know you're in a seller's market. But pricing at market value in a seller's market is actually a wise strategy on many fronts. A smart buyer who's very interested in your house will recognize it's truly priced to sell, and likely won't risk low-balling you. If there's enough interest, multiple offers that start low could result in a final offer that's pretty close to your asking price, which is fairly rare when you get down to it. It might not be the bidding war that goes $100K over your list price you imagined, but it's still a great offer.