Pricing your home to sell is one of the most important steps in selling your house.
But it's tricky. If you price your home too high, you risk limiting the pool of potential buyers. But price it too low, and you could leave money on the table.
You can strike the right balance by considering several factors, like your local market, comparable sales, your home’s condition, and your timeline for moving. An experienced real estate agent can do the research to find the ideal amount that attracts buyers and maximizes profit.
Let’s break down the process.
How to price your home for sale
🤝 Work with a local realtor
- Get a comparative market analysis based on local home sales.
- Learn which home repairs offer the most value return.
- Customize the pricing strategy to your goals.
A listing agent is an expert in all the areas you’ll consider when pricing your home to sell.
Your realtor has access to the multiple listing service (MLS), a private database where they can see details on comparable sales in the area. They can also conduct a comparative market analysis (CMA) to estimate your home’s value based on recent sales of other local properties.
Sellers often think certain upgrades or home repairs will enable them to list at a higher price, but that isn’t always true. Potential buyers have different priorities, so you could end up wasting time and money. A realtor knows what upgrades buyers want, like a new dishwasher, and which home repairs add the most value, such as replacing your garage door.
The moving timeline will also impact how to price a house for sale, and a real estate agent has different strategies for each situation. For instance, if you’re not in a rush, your agent might start at a higher list price. But a tighter timeline often calls for a price that’s at or just below market value.
It’s crucial to find a real estate agent with experience in your area. They'll understand the local market and know what local buyers are looking for.
🏠 Look at comparable sales in your area
- A comparative market analysis compares your home to similar recently sold homes.
- Get a snapshot of how homes in your size and condition are priced.
- See the listing prices vs. the final sale prices of comparable local homes.
The amount for which similar properties in your area sold will guide how to price your home for sale. This is where a comparative market analysis (CMA) comes in. It estimates your house’s value based on comparable properties, or “comps.”
Realtors get this information from the MLS. They compare your home to recently sold properties and active listings with similar sizes, locations, and construction types. A CMA is the most accurate way to estimate your home’s value because it looks at specific factors:
- Number of bedrooms and bathrooms
- Square footage
- Lot size
- Age
- Condition
- Desirable features and upgrades
- Neighborhood amenities
A CMA report should include a detailed property description, selling points, technical features, and other aspects that could affect its value. It will also have active and pending listings of comparable homes, the number of days on the market for each one, listing prices versus final sale prices, and concessions each seller made.
If you're selling without a realtor, you can likely still get a free CMA report from a local agent. You'll want to avoid relying on home value websites like Zillow or Redfin. Their data isn’t as thorough or up-to-date as the information real estate agents can access on the MLS.
📈 Consider the market
- The housing market varies by location.
- In a market with low inventory and high demand, sellers can price higher.
- In a market with high inventory and low demand, sellers may need to list lower.
A good understanding of the housing market is essential when considering how to price a house for sale. Generally, the market is based on supply and demand and falls into three categories:
- A seller’s market has low inventory and high demand. Sellers can list their homes at higher prices.
- A buyer’s market has high inventory but low demand, so sellers may set a lower, more competitive list price.
- In a balanced or neutral market, supply more or less meets demand.
Current market conditions vary by region, so consider what’s happening locally. For instance, inventory could be surging in Southern states, so buyers would have more room to negotiate. But markets in the Northeast could still be competitive because of inventory shortages, giving sellers more power.
The local market’s supply and demand will help your realtor determine the fair market value of your home — how much your property should sell for in the open market based on its desirability.
🛠 Factor in your home's condition and upgrades
- Pricing should reflect your home's unique features and amenities that attract buyers.
- Consider the ROI of any upgrades or repairs before starting the work.
- Your agent can tell you which repairs have a higher impact.
Unique features, recent repairs, and desirable upgrades also impact your list price. For instance, showcasing energy-efficient appliances or systems, finished basements, or comfortable outdoor living spaces can help you justify a higher amount.
However, speak with your realtor before making any repairs or updates. They can help you know what's worth fixing vs. what's not worth fixing based on local buyer preferences.
Also consider which home improvements have a higher return on investment (ROI).
According to the Journal of Light Construction, a garage door replacement is the highest-value upgrade you can make. At an average cost of $4,513, a new garage door adds about $8,751 to a home’s value (a 194% ROI).[1]
Sellers often believe kitchen and bathroom remodels boost a property’s appeal, but it depends on the scale. For instance, the ROI on a minor kitchen remodel is 96.1%, but it's only 38% for a major overhaul with upscale finishes. Similarly, updating bathroom fixtures, counters, and flooring yields a 73.7% ROI, while enlarging the space offers a 34.7% ROI or lower.[1]
🗓 Decide on your timeline
- If you're not in a hurry to move, you can set a higher price.
- If you need to sell very fast, consider listing at 5–10% below market value.
- If your timeline is flexible, consider selling in the spring, when listings often sell above the asking price.
Your listing price can impact how long it takes to sell a house. So consider your moving timeline to help you set the right price.
If you have a longer timeline, start at a higher list price. This strategy gives you more flexibility to test the market and adjust your price based on buyer interest.
However, you don't want to overdo it. An overpriced home can sit on the market too long, making it less appealing to potential buyers who may assume there's something wrong with the house.
Sellers who need to move quickly can price their homes lower to generate more buyer interest.
But pricing lower doesn’t necessarily mean you’ll sell at a lower price. In fact, many real estate agents use this as a negotiation strategy for home sellers because it could start a bidding war and result in higher offers.
If your move date is flexible, consider listing your home in the spring, when sellers tend to get thousands above the asking price. ATTOM has found that sellers receive 13.1% above their home’s market value in May and at least 12% above in February, March, April, and June.[2]
🔢 Pick the right number
- Follow the “99” pricing strategy.
- Choose a round number rather than a random one.
- Set a list price that will appear within internet search ranges.
When you’re ready to choose the exact number for your list price, you'll want to follow a few practical guidelines.
First, use the “99” pricing strategy. If your home is valued at $400,000, list it at $399,000. While the difference is minimal, it’s a well-known psychological trick that can help your home sell faster.
Also, pick a round number — $439,000 instead of $439,726. You may think a creative list price attracts attention, but it only raises questions and confuses potential buyers.
Most importantly, price the property to show up in internet search ranges. These ranges typically use whole numbers, like $350,000–550,000. So set a list price at $549,000 instead of $551,000 to catch buyers searching for homes under $550,000.
Common mistakes to avoid
Many factors contribute to how to price your home for sale, and overlooking even one can cost you thousands of dollars in the final sale price.
To get the most value out of your home and keep your sale timeline on track, avoid these common pricing pitfalls:
- Overpricing. You may think starting at a higher list price will leave more room for negotiation, but that’s not always true. Overpriced homes tend to take longer to sell and get fewer showings.
- Underpricing. Price your home too low, and potential buyers may wonder if there are possible hidden problems. And while you might get lots of interest, you could end up selling for less than the market value. You may also attract unqualified buyers who simply want a deal.
- Relying on online home value estimators. Home value estimator sites aren’t that accurate. For instance, the median error rate for Zillow’s Zestimates can be 2.4% for on-market homes and 7.5% for off-market ones. Local comps tend to be a more accurate comparison.
- Ignoring the CMA. A CMA gives you a realistic look at what homes like yours are selling for. Knowing how you stack up against the local competition helps ensure you get the most value from your home.
- Overvaluing renovations. While some repairs and upgrades add value to your property, others don’t deliver a strong ROI. Your realtor can help you determine which renovations matter most to potential buyers so you can avoid wasting your time and money.
- Skipping an inspection. A pre-sale inspection isn’t required, but it can surface issues that could complicate the buyer’s inspection. Addressing the necessary repairs in advance can help you justify a higher list price and prevent certain negotiations and concessions.
- Ignoring market trends. It’s critical to know whether you’re in a buyer’s or seller’s market. Real estate values change swiftly, and your home may not be worth what it was six months ago. Be flexible to stay competitive.
- Overlooking additional costs. Your list price shouldn't just be based on your home's market value. You must also factor in realtor commission fees, closing costs, and potential repairs. These extra expenses could add up to more than $50,000.
