How to Price a Home For Sale

Whether you're a seller or a real estate professional, a smart home pricing strategy is essential to getting someone to buy your home.

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While there is certainly some wiggle room when setting a price tag, home pricing is more of a science than you might expect. House prices are influenced by the local housing market, square footage, the home’s layout, and many other factors. Some factors are within your control (like renovations to increase the sale price) and others are not (you don’t control the job market in your area, after all).

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Let's explore why accurate home pricing is important, what influences it, and how to ensure your home is priced to sell.

Why Accurate Home Pricing Is Important

A home is your biggest investment. So, it’s only logical to set a higher price to win a bigger payout, right? If only!

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Overpriced houses get less attention, go stale, drop in price, and ultimately sell for less than if they were priced less from the start. That’s time wasted and money lost. Yikes!

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Underpriced homes get more attention—home buyers love a deal—but home sellers end up underselling for tens of thousands of dollars. This can lead to seller’s regret: “If only I knew what my house was truly worth!”

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The best-case scenario is pricing the house accurately from the beginning. You get the right return on your investment, quickly. No seller’s regret, just the proper payout to fund the next chapters in your life’s journey.

Research the Local Housing Market

You’ve almost certainly heard the adage, “The number one rule in real estate is location, location, location.” Prospective home buyers have a lot to consider: “Is the house close to work? What about the schools in the area? How’s the neighborhood? Are there things to do nearby?” And so on.

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Location affects home prices. For instance, other homes selling in your area affect how much your home could sell for.

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Real estate appraisers and agents look at comparable sales (“comps”) to determine how much a home is worth. How do they do this? Using a multiple listing service (MLS), real estate professionals explore recently sold homes similar in size, condition, and location within the same neighborhood. From this data, they adjust for differences (like square footage, upgrades, lot size, etc.) to make a fair comparison.

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By comparing your home with active, sold, and expired/unsold listings, real estate professionals can determine a reasonable price range for the property.

Consider Housing Market Trends

Pay attention to housing market trends. For example, a booming job market in the area will likely increase demand while a lagging local economy depresses demand. These forces are outside your control. But by recognizing their influence, you can better understand how the local economy affects home prices.

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Seasonality causes fluctuations in home prices. Spring and summer are typically active markets with slightly higher prices. Winter and fall are less active. This makes sense when you consider that families usually prefer to move before the school year starts in the fall. Not to mention the winter holiday season can pull people’s focus to other priorities than house shopping.

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The housing market, like any other market, is impacted by supply and demand. Have you heard the phrase buyer’s market? When the local housing market has lots of inventory and fewer buyers, sellers face more competition to attract buyers. This leads to lower prices and more negotiation power for buyers.

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What about a seller’s market? There are fewer homes available than there are buyers. With high demand and low supply, buyers compete to buy homes, which drives prices up and gives sellers more negotiating power.

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Zooming out to get a fuller picture of market housing trends offers more insights into how your home’s worth is determined.

Factor in Property-Specific Features

Now that we’ve covered how the larger area and economy affect your home pricing, we can focus on the house itself. It should go without saying that houses in good or excellent condition are priced higher than a “fixer-upper” or houses needing major improvements.

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Size matters in residential real estate, but how the space is used matters just as much. Square footage and lot size are almost always balanced by the number of bedrooms, bathrooms, and the home's functional layout.

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Each of these factors is compared and contrasted to the rest of the area. If two-bed, two-bath properties are the norm and the house you’re selling is only one-bed, one-bath, that could lower the asking price. Conversely, if your for-sale home offers three bedrooms, two bathrooms, a big yard, and an extra-large garage, you could have a competitive edge over the rest of the neighborhood which translates to a higher asking price.

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Keep in mind that what raises or lowers your asking price may not align with every buyer's preferences. Some buyers may not want to spend more for added space or features. Just because your home has more to offer doesn’t guarantee increased buyer interest.

Unique Selling Points

If your home has unique features—like a renovated kitchen, the only pool in the neighborhood, solar panels, or a front yard fountain—that can impact its price. These selling points may attract specific buyers. For example, a movie lover might adore your home theater, while someone else might appreciate a historic building or a garden.

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But it's not always clear which features will actually increase your home’s value. You might think your fountain is a major selling point, but buyers may not agree.

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To find out which features truly add value, it’s best to consult home pricing experts (more on this below).

Get a Professional Appraisal

Hands down, the best way to know a home’s value is by hiring a real estate appraiser. It’s an appraiser’s job to provide buyers, sellers, real estate agents, and lenders with unbiased assessments of a home’s value. Appraisers use an MLS and other software to explore the home’s features as well as market data to come up with their price adjustments.

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Traditionally, appraisers are brought in to assess the property value after the completed transaction. This is a requirement because lenders need to know the value of their investments.

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However, pre-listing appraisals are growing in popularity. While these are not required, they give crystal clear insights into a home’s true value. Home sellers benefit from knowing a home’s value before they set prices and buyers know that the price tag is merited.

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So, why doesn’t everybody get an appraisal before they put up their home for sale? It comes down to time and cost. Appraisals can cost hundreds of dollars. And because home valuations require an appraiser to come to the house as part of the process, it can take a few days to schedule an opportunity and produce a report.

Discover the Fair Deal Zone for Any Home

If you’re looking for a fast, accurate home pricing solution, there’s no better option than a Fair Deal Zone report from Reverified. For only $49, home sellers and agents receive an unbiased home price recommendation. That’s good news because homes priced properly sell faster and for the right price. This is a win-win for buyers and sellers.

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To figure out the Fair Deal Zone for any home, Reverified:

• Creates property clusters based on similar properties throughout an entire geographic area (including but not limited to the neighborhood)
• Identifies and ranks 19 home features based on thousands of data points
• Leans on our pricing experts to examine the unique property features algorithms simply cannot judge (like curb appeal)

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All of this information comes together in our Fair Deal Zone Report which indicates whether your property is priced high, priced low, or priced fairly for both buyers and sellers.

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The Fair Deal Zone report can be a competitive advantage for sellers. Homes priced within the Fair Deal Zone range receive badges and marketing materials to show that the property’s price was objectively determined.

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‍So, if you’re ready to price your home for sale, order a Fair Deal Zone report from Reverified today!