What it means when a home is “priced to sell”
Some home buyers scratch their heads when a listing says “priced to sell”. After all, aren’t all homes for sale priced to sell? Well, yes, but there are nuances in pricing that every home buyer and home seller should be aware of.
Home pricing strategy
Pricing a home right is dependent on two factors: the market, and how quickly the seller is looking to sell.
If you have a market where homes are very much in demand, then you might expect to have multiple offers. This should influence your pricing strategy. In this case, you could set the price reasonably (in line with comparable property sales in the last 6 months) and expect it to be bid up.
If, on the other hand, you are in a cool market, pricing a home in line with comps is unlikely to attract a bidding war simply because there may not be a steady stream of buyers at the exact same time. A way to attract more buyers is to price it a wee bit lower, and market like crazy to try to bring in a wider net of potential buyers.
It doesn’t really every pay to overprice a home. Overpricing a home will often limit the buyers in any kind of market. After all, buyers usually pick a price range they are comfortable with, and where they can qualify for a mortgage. Overpricing a home excludes potential buyers and lowers the possibility of a bidding war in a hot market. It will also slow the sales process in a slow market.
In any case, if you need to sell quickly, pricing the home under comps will draw more people to your listing. In a hot market, there’s less risk as the price may be bid up. In a slow market, you may sell faster but at a lower price. Particularly if there is only one potential buyer and no buyers bidding against each other.
How to price a home to sell
Let’s say you want to move as soon as possible. Maybe you have a job offer in another city, or you simply can’t afford the property anymore. Perhaps you just won a million dollars and you don’t mind leaving some money on the table in order to move to ritzier?
Then, you want your home to be “priced to sell”. This means, pricing your home under the comps for similar properties.
(If you don’t know what your home is worth, we have a handy guide on how to figure out what the comps are in order to properly value your property.)
What if you are buying a home that is “priced to sell”?
You may think you are getting a real steal if a home says “priced to sell”. It pays to understand exactly why the owner is selling. Is there something wrong with the property? The neighbors? Why does the seller want to hightail it out of there?
Maybe the home has sat on the market a while and it’s time to cut the price. Or, maybe the owner wants the convenience of moving faster, even if they miss out on some money. It might be that the owners divorced and want to split the assets quickly. Whatever the reason, a home is a big purchase and you’ll want to know if you are really getting a deal, or if there’s a reason for the sudden departure that would affect your finances or quality of life.
Find out if there are bad neighbors, and make sure you get a thorough inspection to make sure there are no hidden issues to warrant an unexplained price reduction.