Should You Price Your Home High or Low?September 20th, 2021 by Administrator
In LA, every homeowner wants the highest price for their house on sale. Of course, the prospects of getting maximum money for your property seem exciting as it might help you pay off the mortgage, cover the education of children, buy another property in the desired location, or do anything you want to do with the profit. Hence, most home sellers end up pricing their homes too high – which is the worst mistake that sellers make when their selling homes. That said, nobody likes to list their homes with a lower price tag.
So, what should a home seller do? Should a home seller price their home high or low? Let’s find out.
What Happens When You Price Your Home High?
If you set the price of your home too high, your home is going to sit and accrue market time. When that happens, in especially a moving market, you are automatically going to lose the fair value of your home.
What Happens When You Price Your Home Low?
Going low on the price scale can help you grab attention to your home as soon as it is listed on the market. Low prices encourage buyers who are looking for affordable homes in LA and create a sense of thrill among them because they don’t want to miss out on the best deal.
The important thing to understand is that setting the price low doesn’t mean that it will be the final selling price. Pricing your home low gives a kick to a bidding war that will eventually drive the price of your home up.
But pricing your home low or high in the LA market at the wrong time can also backfire. Your local real estate agent can help you understand the current state of the LA market and determine which strategy will work in your favor.
When Is It Better to Price My Home Low in LA?
Several circumstances fit best for home sellers when they price their homes on the low end. Some of these are:
1. When Demand in Your Area Is More than Supply
The best time to price your home low is when the LA’s seller market is hot. Meaning, the demand for houses in your area exceeds the supply. When there are more buyers and fewer options, it naturally raises the stakes among buyers for getting the perfect home before anyone else.
2. When You Want to Sell Your Home Faster
When you need to relocate soon due to a job change or for other reasons, it makes sense to price your home lower at first. It will help your home attract more buyers quickly, especially when the housing inventory is low in the local market. With multiple offers in hand, you will be in a better position to negotiate in favor of your desired moving dates and ensure a quick close.
3. When You Want Multiple Offers for Your Luxury Property
Owners of luxury villas, condos, and apartments often find it difficult to get desired offers. It takes very long for a buyer to make an offer when the price is too high. While sellers wait to see if they get any good offer, buyers wait to see if the price drops, and the situation remains more or less the same for a longer period. Pricing your luxury home a bit lower can start the chase as interested buyers will hustle to get their hands on the luxury home first.
Be careful. Don’t set too low price; otherwise, buyers may question that something is wrong with the home.
4. When You Want to Sell a House That Needs Major Repairs
At present, house flipping is the rising trend in the LA market. So, if your house also needs major repairs and renovations, you can quickly make a sale by pricing it at the low end and save yourself from spending time and money on remodeling. In this case, you just need to focus on cleaning, de-cluttering, and staging your house properly.
When Should I Not Underprice My Home in LA?
While there are benefits of underpricing your home, it may not bode well under certain situations, such as:
1. Home prices are going down in your market
You will benefit from the low price only if house prices are trending upwards or at least stable in the market. If home prices are going down, buyers will wait and expect that they might get even a better deal. Hence, they are least interested in bidding up prices. During such times, you must carefully price your home competitively.
2. Buyers Have Various Similar Options to Look At
When there are many similar homes on the market, buyers have less pressure to bid for your home. They have a mindset that if they cannot get a good home deal from you, they have backups and might get a better deal down the road.
3. You Have Priced Too Low From the Market Value
We all believe the phrase “too good to be true” when it comes to buying a home. So, when you price your home too far below the market price, buyers assume that the home has hidden issues and it might need expensive repairs. They will either prefer to consider other properties in the area or try to close the deal at the least possible price because they will see it as a fixer-upper or a distressed property. Both of these scenarios are harmful to a home seller.
Hence, when it comes to setting a price for your home, seek expert advice. A local real estate agent can help you understand the current state of the LA market, set the right price, attract more serious buyers, and get much better offers.