If you are serious about selling your home now, don’t get greedy with the asking price.
This is still a seller’s home market as there simply aren’t enough affordable homes for sale in many parts of the country.
But with average 30-year mortgage rates above 6%, buyers are much more price-sensitive than they were a year ago. Agents and brokers say the price is the most important thing for sellers to worry about right now. Pricing it too high a year ago often didn’t backfire as prices were surging broadly. Doing that now could scare off many buyers in a vastly different market.
Agents and housing economists say homeowners trying to sell now need to accept they are probably not going to get the same price their neighbor did early last year when mortgage rates were hovering around 3%.
About 25% of homes sold above list price in December 2022 compared with 44% of homes during the pandemic frenzy the year before in December 2021, according to Zillow. Sellers can take heart that more homes are going for above asking than this time of year in 2018 and 2019.
“It’s not the same type of seller’s market we saw in 2020 and 2021 where home sellers could list their home at almost any price and count on a bidding war,” said Jeff Tucker, Zillow senior economist.
Another reason to be more measured with asking prices is that more homes are going on the market. There were 980,000 homes for sale or under contract across the country at the end of January, up 2.1% from December and up 15.3% from January 2022, the National Association of Realtors said.
There are steps sellers can take to improve their chances this spring, in addition to the standard advice to clean, declutter and make certain repairs. When it comes to price, there is a fair bit of homework to do. Here is how to get started:
All asking prices are local
The key factor in home prices is location. In January, most of the 150 metro areas Realtor.com tracks had yearly price increases, while 22 had declines, and prices were flat in seven.
Sellers are faring best in the middle and lower-priced slices of the housing market, according to Rob Barber, chief executive of real-estate analytics firm Attom Data Solutions.
In areas with homes priced below $350,000, prices declined 1% to 6% during the second half of last year. For areas with median prices above $400,000, prices dropped 4% to 10%, Attom found.
Buyers place an even higher premium on homes’ nearby amenities, such as quick access to public transportation, public spaces and retail stores, said Sam Chandan, founding director of the Chen Institute for Global Real-Estate Finance at New York University. Highlight in your listing what is in easy reach of your home, he said.
Check the comps and understand what buyers value
The comparable sales that owners and agents use to set asking prices need to be as recent as possible due to the volatility in mortgage rates and inventory levels, agents said.
Six-month-old sales are likely outdated, with prices in some neighborhoods up dramatically in a short period, and some neighborhoods experiencing notable price drops, said Russell Brazil, a Realtor in Washington, D.C. Comps that show sale-price data for homes that are similar in square footage, age, condition, and ZIP Code are typically the most useful, real-estate agents said.
Don’t assume you can price your house at a premium because of improvements, said Carla Christenson, a Realtor in Jupiter, Fla.
Ms. Christenson recently went on a listing appointment with a seller who remodeled their home with dark-color materials including wood and stone. The seller, who was from the Northeast, though the Florida property was worth more than comparable homes. The only problem: Many Florida buyers prefer a light and bright home, said Ms. Christenson. Darker homes often sit on the market longer and ones with a coastal look sell for $200,000 to $300,000 more, she said.
When overpricing backfires
Setting a high price for your home and waiting for buyers to negotiate is a mistake some sellers are making now, especially those with waterfront properties, Ms. Christenson said.
Starting high and waiting for an offer often doesn’t work today, as buyers are often frustrated with their post-pandemic home search and working with smaller budgets. They typically don’t want to spend time trying to gauge how negotiable a seller is, she said.
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It is important to price a home correctly when it first lists as the longer a home stays on the market, the steeper the price cuts typically become, real-estate agents said. Of all homes sold within 30 days so far in 2023, the average discount was 7%, said Lawrence Yun, NAR’s chief economist. Homes on the market over 120 days sold with 16% off the list price.
Pricing at or below market is key, said Maria Daou, a real estate agent in New York City.
“There’s not a lot of inventory, so if priced right, you’ll create buzz and potentially a couple of offers,” she said.
It might pay to wait
Regardless of location, sellers might want to wait until later in the selling season to list.
The five days when sellers around the country received the best premium over their asking prices were during the third and fourth weeks of May, according to a 2022 Attom study that analyzed home sales data from 2011 to 2021. May 23 is the most profitable date, commanding 18.3% above market price.
The months with the greatest seller premiums are May (12.6%), June (10.7%), July (10%), April (9.2%) and March (8.9%), Attom found.