When it comes to selling your home, the most important factor is pricing it correctly. The price tag has to match your house’s worth if you want it to sell (and sell quickly). Pricing your home on the lower end is not the end of the world: you will likely get multiple offers and be able to sell your home at or above market value. However, overpricing your house can set you up for disappointment.  If your house doesn’t sell quickly, you could lose momentum and have to lower the price after the fact. Below are some tips to help you find that sweet spot for selling your home as quickly as possible.

Listing Price vs. Selling Price

The first thing to determine is your target selling price for your property. It is unlikely that this amount will be the same as your listing price. The selling price could be higher, lower, or the same as your listing price, depending on the market. Spend some time thinking about your target selling price, and then base your listing price on the current conditions of the housing market in your area.

Be honest with yourself about the condition of your home compared to other homes that are selling at the speed and price that you desire. Do you have a bigger kitchen or renovated bathrooms? Do these other homes have fresh paint, updated kitchens, or professional photos? What do they have that you as a seller can compare to? In simple terms, do you have what buyers want? Are you willing to provide what buyers want? If not, are you willing to lower your listing price?

Assessing the Market

In a sellers’ market, things can get heated. In 2015, we had what I like to call “the summer of the escalation clause”. This was admittedly a nerve wracking time to be a buyers’ agent. There was not enough supply to meet the demand of buyers. Every house and condo in Nashville had 20 buyers lined up for viewings. Sellers were seeing offers written tens of thousands of dollars over asking price with escalation clauses.

In an escalation clause, buyer A is willing to pay X price for a home, but if the seller receives another higher offer, then buyer A is also willing to increase their offer to Y price or by Y percentage. Real world example: "I'll give you $300,000, but no more than $20,000 over whatever this house appraises for" or "I'll give you $10,000 over the highest offer, but no more than $10,000 over the appraisal amount".

In today’s market, we are looking at neutral leaning toward buyers’ market. In a buyers’ market, you want to stand out with the same features and perceived value, but for a little less. Let’s say for example you’re looking to move quickly and you find that all the houses in your neighborhood sold at $214,900. You should price your house at the same price or just below. While there are some really spectacular properties in Nashville getting their asking price, the average buyer is offering asking price or just below and also requesting concessions - such as closing costs, home warranties, or repairs. It’s not the most glamorous market, but it’s the reality, and I am well-equipped to help my clients navigate these waters.

Doing Your Research

Now you’re ready to do some research to help you make an informed decision on your listing price.

First, you should search for comparable homes (or comps) that have sold within the past 3 months. Search within a 1-2 mile radius around your home, depending on your neighborhood’s density. When considering your neighborhood’s density: How many homes are in your neighborhood? How spread out is your neighborhood? Adjust your radius depending.

Assess homes that have similar features to your property. Features to pay attention to include:

• Square footage of the home

• Carport/Garage

• Number of bedrooms and bathrooms

• Acreage/Lot size

• Age of the home/When it was built

Comparables, also known as comps, is a real estate term used in appraising properties that have similar characteristics (size, features, condition, etc.) to the home you are selling.

According to market data from Greater Nashville Realtors, homes (including condominiums) sold in Q4 of 2018 for Nashville’s urban core (440 loop) had the following median prices:

• 2br/1ba: $224,900

• 2br/2ba: $364,900

• 3br/1ba*: $245,000

• 3br/2ba: $379,900

* All new 3 bedroom homes have at least 2 bathrooms. The 3br/1ba homes in this survey were built before 2000.

As you can see, a second bathroom adds exponential value to a home.

If you are having trouble finding comparable homes, consider the following factors. If your listing has a garage and others do not, add $10,000. If you have one more bedroom than other homes in your neighborhood, that can add an average of $27,500 in value to your home. Be aware that not all houses have the same additional bedroom(s) or garage and that markets and houses vary.

The above tips are a great starting point if you’re ready to sell your Nashville home. If you’re looking for a comparative market analysis, I will be happy to help you make an informed decision. Contact me with your selling needs.

This is the first post in a series of what to expect as a seller. Stay tuned for more!