Know Your Local Market and How to Price Your Home When Selling
Selling your home can feel like preparing for a first date—exciting, nerve-wracking, and loaded with potential pitfalls. One crucial element often overlooked in the emotional whirlwind is setting the right price. Pricing your home accurately can make the difference between a quick, profitable sale and your home becoming the real estate equivalent of yesterday’s bread—stale and ignored.
Let’s dive deep into how you can master pricing your home by understanding your local market with precision—and a dash of humour.
Maximise Your Sale Price When
Selling
This easy to follow guide includes a step-by-step how to’s, cost savers, checklists and expert advice. Easily add tens of thousands to your property’s value
Why Knowing an Accurate Price is Important
Pricing your home correctly isn’t just about picking a number—it’s about understanding buyer psychology, market dynamics, and positioning your home effectively. An accurate price sets the stage for attracting the right buyers immediately, enhancing perceived value, and ultimately ensuring a smoother, quicker sale process.
Overpricing your property can deter serious buyers, creating prolonged market exposure, which can lead to price reductions and the undesirable perception of a property being undesirable or having hidden flaws. Conversely, underpricing your home may attract immediate interest but may lead to selling your property below its true market potential, leaving money on the table. Accurate pricing leverages competition among buyers, maximising your chances of achieving a premium sale price.
The easiest way to blow dollars when selling is to over price your home
Perception of competition is more important than competition itself
Let’s face it – real estate agents don’t have the most trust worthy professionals out there. And if you try and buy a home, there’s always “another buyer” who wants to take it from you.
It’s the competition from the other buyer that pushes the price up. So what’s this got to do with your price?
The buyer of your property may choose to not believe the agent about “the other buyer”. But they will believe their owner eyes. If the inspections are busy they will use this as an indication of popularity or competition and adjust their price accordingly.
If you overprice your home, less people are inclined to inspect. Less inspections decreases the perception of competition in the buyers eyes, handing leverage over to the buyer in a negotiation.
Understanding your home’s accurate value also empowers negotiations. With precise market insight, sellers can confidently justify their pricing decisions during negotiations, effectively counter lowball offers, and avoid emotionally driven decisions. This clarity fosters better interactions with potential buyers, agents, and conveyancers, leading to more positive outcomes.
In essence, accurate pricing significantly impacts how quickly and profitably your property sells, affecting your ability to move forward with your future plans without unnecessary delays or financial setbacks.
How to Assess Your Property Value
Step-by-Step Guide to Pricing Your Home:
- Start with a Comparative Market Analysis (CMA):
- Gather data on recent sales of similar properties in your neighbourhood.
- Consider homes sold within the past 3-6 months and within a kilometre radius.
- Evaluate Your Home Objectively:
- Factor in size, number of bedrooms and bathrooms, age, renovations, and unique features.
- Be honest about wear and tear—rose-coloured glasses won’t help here!
- Adjust for Local Market Trends:
- Consider current supply and demand, seasonal factors, and economic conditions.
Common Pitfalls (and How to Avoid Them):
- Overpricing: Setting your price too high is like showing up to a casual dinner party in formal wear—you stand out for the wrong reasons.
- Underpricing: Pricing too low may lead buyers to suspect something’s wrong—like seeing a Lamborghini listed for the price of a Toyota.
Realistic vs Aspirational Pricing:
Realistic pricing attracts genuine buyers quickly. Aspirational pricing often leads to longer market times and eventual price drops, negatively impacting buyer perception.
Resources Available to Price Your Own Home
Online Valuation Tools and Apps:
- Websites like Domain, Realestate.com.au, and PropertyValue.com.au offer quick estimates.
- Treat these as starting points, not gospel truth.
Using Comparable Sales Data (Comps):
Professional Appraisals:
- Costs typically range between $300-$600.
- Recommended when your property is unique or comps are limited.
The Importance of Assessing Current Market Performance
Ideally, you would want to list your property in a seller’s market where there is increased buyer demand, which typically drives higher sale prices. In contrast, a buyer’s market generally has more sellers than buyers, meaning buyers may have more options. While it’s preferable to list in a seller’s market, it is important to note there can be strong selling opportunities in any market.
Accurately assessing current market performance is vital because real estate markets are dynamic, influenced continuously by economic, political, and social factors. Keeping tabs on the market enables sellers to make timely, strategic decisions about pricing, marketing, and negotiating.
Knowing the market reduces uncertainty and helps avoid emotional biases. Sellers often overestimate their property’s worth due to sentimental attachment. Objective market analysis provides a reality check that keeps expectations grounded in fact, not fiction.
Moreover, effective market analysis helps manage expectations. Knowing typical days on market, clearance rates, and buyer trends prepares sellers psychologically and financially for the selling journey. It minimizes stress by providing clarity on expected timelines and potential negotiation outcomes.
Regularly assessing market performance also identifies shifts early, allowing you to adapt your strategy proactively. Early indicators of market cooling—such as increased days on market and lower clearance rates—can prompt sellers to price more competitively or enhance property presentation.
Finally, being well-informed enhances your credibility. Educated sellers communicate effectively with agents and buyers, fostering trust and smoothing the transaction process. In short, knowledge isn’t just power—it’s profit.
Resources Available to Gauge the Market
Market Trend Tools and Websites:
Attend Local Open Houses and Auctions
- Gain firsthand insights on buyer interest and competitor pricing.
Leverage Local Real Estate Agents
- Engage directly for current market intelligence and nuanced advice.
Important Indicators for Determining Market Performance
Key Metrics to Monitor:
- Days on Market (DOM): Realestate.com.au
- Auction Clearance Rates: Domain Auction Results
- Median Sale Prices: Domain Market Reports
- Inventory Levels: SQM Research
Economic Indicators:
- Interest Rates: Reserve Bank of Australia (RBA)
- Employment Rates: Australian Bureau of Statistics (ABS)
- Consumer Confidence: Westpac-Melbourne Institute Index
Different Selling Periods Throughout the Year
Spring, Summer, Autumn, Winter
- Evaluate pros and cons for each season based on market dynamics.
- Strategic advice on timing for optimal market conditions.
Wrapping It Up
Pricing your home correctly involves blending accurate data, local market insight, and common sense. Like baking, precise measurements lead to delicious results, while guesswork might leave a sour taste. Stay informed, use resources wisely, and remember—a little humour can sweeten even the toughest selling process.
