Three Home Pricing Strategies for Selling Your Home Above List Price
In today's real estate climate, homes sell quickly…and some sell well above the asking price. However, the trend of selling a home above the asking price stalled this spring. In the first quarter of 2023, buyers paid 99.9% of the list price for single-family homes in St. Louis. This summer, in the prime selling season, buyers probably will pay more than the asking price for homes in desirable neighborhoods. Homeowners who want to reel in big offers have three home pricing strategies to consider.
The Balancing Act of Pricing a Home Just Right
Every seller wants their home to sell quickly and at top price, but figuring out the sweet spot between overpriced and underpriced is tricky. Most sellers turn to an experienced real estate agent for help pricing a home. Before advising sellers on a pricing a home, a real estate agent will:
- Conduct a comparative market analysis, looking at sales of similar homes in the last 90 days. This is often called running comps.
- Consider the selling points of the neighborhood like good schools, restaurants, and parks.
- Walk through the house to see if it has features buyers want.
- Ask other agents what they think about the value of a home.
The law of supply and demand affects pricing a home. Wherever buyers face stiff competition for getting the home they want, sellers can ask more. Many of the most desirable St. Louis communities have fewer homes on the market than in previous years. The number of single-family homes for sale in St. Louis in April was just under 2,000, down 1.7% from April 22, and significantly lower than the 2,426 homes available in April 2021.
After doing their research, real estate agents suggest a list price to the sellers. Keep in mind the listing price is the advertised cost of the property. After negotiations between the seller and buyer, the final sales price may be more than the list price or less.
Selling a Home Above List Price in St. Louis
To gather information on your chance of selling a home above list price in St. Louis, look at the St. Louis Realtors Association monthly indicators:
- Average Sales Price. See if the price has gone up or done in recent months.
- Average Days On Market. Houses sell in less than ten days in a strong seller’s market.
Asking vs. Final Price. When it is a seller's market, the final sales price is typically at least 10% higher than list price.
Three Home Pricing Strategies
Sellers use one of three home pricing strategies when they want to sell above list price:
- List at the market value. Even in a seller's market, listing a home at its market value is a wise move. A desirable home with a fair list price should sell quickly. To get a ballpark estimate of the market value of your home use our real estate calculator. Fine tune the list price with your real estate agent then enjoy a profitable sale.
- List above market value. Some homeowners see a seller's market as a chance to make more money by listing their home above market value. Most go with 5-10% more.
There are two ways the strategy of listing above market value backfires: 1) Overpriced homes often sit on the market for months. Buyers can see how long homes have been for sale and they wonder whether something is wrong with them; when that happens, houses become harder to sell. 2) When an offer does come through, the buyer will not be able to get a loan for a house appraised at less than what they offered the seller.
Listing a house above market value does pay off in super-hot markets where buyers often make cash offers. The buyers do not need appraisals to get loans, so the sales goes smoothly.
- List below the market value. A home listed below the market value gets a lot of attention. A bidding war may break out leading to many good offers. If you want to gain exposure this way, list the price 5-10% lower than the market value.
When you have multiple bids, choosing the best offer can be a challenge. One may be contingent on the buyer selling their home but be the highest bid. Another may lack contingencies, but the buyer is not prequalified for a loan. The seller decides which to accept based on their priorities.
Listing below the market value is risky because the only offer may be one for the asking price. This does not happen very often in a seller's market, but one cannot rule out the possibility. Sellers also need to be ready for a lowball offer well below the market value.
With so many choices each involving thousands of dollars, it pays to have the advice of a real estate agent with BHHS Select Properties. We help homeowners decide the best home pricing strategies for their situation. Contact us today to discuss selling your home at a price you will feel good about.
Cover image by Nguyen Huu Cuong on Canva.com
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