Pricing a Home to Sell Fast in Any Market
Selling a home fast is the key to any flipping project, and it’s a skill you need to learn in any market. While you’ll usually have no trouble when supply outstrips demand, you can run into trouble in a slow market without a solid pricing strategy.
Can a Home be Priced too Low?
Many real estate agents argue that you can never price a house too low, as the market will always take care of it for you. Low asking prices also come with a big advantage: more foot traffic, more interested parties and competing bids. In one case, an agent listed a home for $535,000, even though it was appraised at $560,000. The home sold in weeks for $575,000.
If you start your price too high, however, you’ll just end up lowering it and chasing the market. When you start lowering the price, people will wonder what’s wrong with the house. After it’s been sitting on the market, people will start giving lowball offers.
When you’re flipping a house, you also can’t afford to sit and wait like a homeowner can. The holding costs will quickly eat into your profit and turn the deal into a losing proposition.
Always price your home conservatively. Look at comparable properties currently on the market to determine a fair price, and always look at the nearby homes that aren’t selling. There’s a good chance those sellers are pricing them too high!
Shaving just a few thousand off your asking price is a guaranteed way to increase foot traffic and create a buzz around the property. This is a winning strategy to get your home sold as fast as possible.
Selling in a Buyer’s Market
Trying to sell a home in a buyer’s market can feel like an uphill battle if you’re not prepared. If prices in the area are dropping 1% per month, and you need to sell quickly, you should start by taking 3% off your asking price right away. If homes are priced around $400,000, you should be around $388,000.
The advantage of this strategy is you get ahead of the market — and your competition, who are probably dropping their price every month and giving off the scent of desperation. In markets with falling prices, you’ll also make more money the faster you sell.
Your Exit Strategies
If you had an enter strategy, make sure you have an exit strategy for every property. Consider what can go wrong, and work this into your exit strategy for pricing the home.
If the home isn’t selling quickly, options to consider include:
- Lowering your price. Make sure you know your break even price.
- A lease option, which can get you the price you want for the home.
- Renting the property.
Never forget that pricing can be an ongoing discussion. Don’t think of pricing as a set-and-forget process, as many factors come into play. You’ll need to be flexible and quickly react to any changing market conditions as an aggressive plan of action will net you the best price in the end.