A Guide to Pricing Your Collin County Texas Home for Sale

A Guide to pricing your Collin County, Texas Home for Sale

How to Price Your Home Without Leaving Money on the Table

Jane Clark, Realtor

Jane Clark is a nationally recognized expert Luxury Realtor with Keller Williams in McKinney, Texas. Her 22+ years of experience in Real Estate Industry have made her an in-demand speaker. author and Real Estate educator.

If you want to sell your home in the coming months, you'll be wondering about pricing your home correctly. Setting your home price fairly has a major impact on how fast your home sells. In some cases, it will make or break a sale. There's no overestimating the importance of this step when setting your house up for sale, especially now that the real estate market is beginning to show signs of slowing down after the rollercoaster of the pandemic years.

It's no secret that home sellers have enjoyed seller's market conditions for a good couple of years now. A severe imbalance in the supply and demand of housing led to surging home prices. Home sellers in in-demand areas didn't have to think too much about pricing their homes correctly, with many homebuyers so desperate to secure a property that they would agree to home prices well above what was normal or average for that particular area.

However, at this point, all the signs are pointing to a housing market that's slowing down, with the supply-demand ratio slowly rebalancing. This means that pricing your home correctly is once again paramount if you want to sell your home this year.

What strategies do real estate experts use to price your home?

Pricing your home correctly can make the difference between a house that sells and one that doesn't. Sounds simple, but it's true. A home that's been priced too high is typically off-putting to home buyers who now have a wealth of average home price data a few Google-search clicks away. Researching home prices is one of the first steps a homebuyer will take when looking for a home, and avoiding overpriced properties will be one of the key pieces of advice they'll be given.

Let's be honest here: although negotiating home prices can be a necessary part of the home buying process, it does prolong the home buying journey. Most buyers prefer a home already fairly priced so they don't have to enter a protracted negotiating process.

There's another reason overpricing your home can lead to a slower sale — or worse, a sale falling through altogether. A home incorrectly priced and then reduced in price in the online home listing will automatically ring alarm bells for buyers. They will assume there's something wrong with the property.

Finally, if a home has been priced too high and the mortgage lender returns to the buyer with a significantly lower home appraisal, the buyer likely will be denied a mortgage. The result is that the home sale falls through.

What strategies do real estate experts use to price your home?

Having said all this, how do you price your home correctly without leaving money on the table? No one wants to come worse off during home sale negotiations, so what can you do to sell your home at a price that's fair but not too low? The answer may surprise you.

To sell your home at the best possible price, you typically need to price it competitively. If you're not sure, aim to price your home just a little under what a home of your size and type should sell for in your area. The homes that sell at the best prices are those that generate bidding wars from multiple buyers. Buyers generally know a good deal when they see one and react. You're much more likely to get multiple offers in excess of your asking price if the asking price is just a little under what buyers were preparing themselves for.

How low is too low? An experienced real estate professional is best positioned to answer that for you. You should always work with a real estate agent who has experience selling homes like yours in your area. Their knowledge of correctly pricing your home will come from prior sales, which is always better than doing your own calculations and potentially getting it wrong.

What strategies do real estate experts use to price your home?

Think of it this way: a real estate expert is working for you, the seller. However, to sell your home at the best possible price, they need to make your home as attractive as possible for the right type of buyer. Any real estate professional worth their salt will know that a home that sells fast and without leaving money on the table is a home that's marketed to the right audience.

For example, there's no point marketing a one-bed urban apartment to families, just as there's no point marketing a luxury home with a pool to families on tight budgets. A real estate agent is a little like a matchmaker: it's all about assessing home sellers and home buyers for compatibility.

A real estate expert will also have a keen eye for the aspects of your home that are attractive to buyers. Whether it's curb appeal and a beautiful backyard or space for a home office you hadn't considered, they'll assess your home in a fresh way that can make a substantial difference to pricing.

About Home Appraisal

What is a home appraisal? An appraisal is a written document by a Licensed Appraiser hired by the Lender that will give you the mortgage on your home.

The Appraiser’s responsibility is to make sure the home is worth what you are paying for it and the Lender is loaning on it. It might surprise you to know that your down payments may also be taken into consideration. The Appraisal is not necessarily the value of what the home is worth.

The major determining factor is based on sales in the neighborhood of similar homes in size, condition and style, for the previous six to twelve months. These figures are derived from the same MLS system that REALTORS® use.

If your home purchase is a non-qualifying assumption or a cash sale, an appraisal is not required and in most cases, one is not done.

However in highly competetive markets where multiple offers are the rule, and offers above list are common, the mortgage lenders appraisal policies can become a dominant factor in making a succesful offer. In such cases, it is not uncommon practice for a motivated buyer to offer to pay the differece between the offered price and appraiser's value.

About Title Insurance

Mortgage lenders require their customers to get title insurance. The companies also require that you pay for a title search. A title search is an extensive search through legal documents to prove the person selling you the property has legal claim to do it. So why have title insurance in addition to a title search? The search may have an error, or it may have come across forged documents, which would pass the title search. Around six percent of all policies have a claim, so it is not as uncommon as some may think.

What Is a Repair Amendment?

You may need to think about repair amendments during the course of buying a home, typically during the option period and after your inspection. Your agent will prepare your repair amendments for you, but as a buyer, it pays to understand how to write an effective repair amendment as the language used in them can have serious effects down the road. Understanding both how to write a repair amendment with negotiations and the final outcome in mind, as well as how to write them so that what you want is really what you get, can save you a lot of time and hassle later down the road. Remember, these repair amendments become part of the contract and performance of the items contained within them is serious business. Many real estate lawsuits center around the repairs agreed to and made and whether or not they were sufficient. Know what goes into the repair amendment before you sign so you can avoid any issues that could affect your purchase.

Negotiating Repairs

After your inspection and your review of the inspection report, you’ll probably have a laundry list of items that you want to be repaired in order for you to continue with the purchase of this home. We understand anyone’s desire to have everything perfect in their new home, but the reality is that all homes have items that can or should be fixed. Even the inspection on a brand new home will turn up items that need correcting. The goal here is to come up with a list of items that the seller needs to fix…and that they will agree to.

Since no home is ever perfect, you’re going to need to take a look at the inspection report and decide what matters to you most and what can be negotiated by both parties to create the magical win-win situation. Simply sending over an inspection report and saying “fix everything” will more than likely get you a denial from the seller. So how do you determine what to ask for and what not to ask for?

You want to take a look at the big picture. What items do you feel are the so-called “deal killers” – those items that you cannot see past and will cause you to walk away from the home in an instant. Typically, we see these are big-ticket items like roofs and HVAC units or health and safety issues such as faulty wiring or items that create a risk of fire, electrocution or explosion (think leaking gas).

Every homebuyer is different though and what you might consider a no-go, the next homebuyer might not even flinch at. It all depends on your needs and comfort level.

As well as your needs, you’ll need to consider where the seller is coming from. Did they just take a really low offer from you on the home? Are they trying to move quickly due to a relocation? Are they facing foreclosure or perhaps they just need to sell because they don’t have the money? There are so many factors to consider and your real estate agent can help you see some of the potential pitfalls to the negotiation before they even happen. Remember, the goal is to get the seller to repair items, not bury them in so much that they refuse to do anything.

Writing Repair Amendments

Our biggest tips to writing repair amendments are simple: be specific, don’t overuse words and don’t under explain what you need, and let the inspection report do the talking.

Be specific. We’ve seen cases where repair amendments said something along the lines of “have sprinkler system checked.” The seller did exactly that. They paid to have someone come out and inspect the sprinkler system…and nothing more. There were issues with the sprinkler system (in this particular case a broken pipe under a sidewalk which was causing a major loss of water) and because of the language in the inspection report, the seller merely confirmed what everyone already knew, the sprinkler system needed repair. The two strongest words you can use in a repair amendment are repair and replace.

Over/under explaining things. Be succinct in your wording. Don’t become a junior inspector or plumber or electrician. Let the experts determine what is wrong and fix it. Sometimes people try to use a lot of big words or even legalese to make the repair amendment sound official. You want to write clearly and in simple, plain language to get to the heart of what it is you want to be accomplished.

Let the inspection report do the talking. Quote items in the inspection report and give reference numbers for pages or sections of the report where the item appears. Let the inspector’s words inform what needs to be done.

Remember, that all repairs must be done by a licensed person if the trade requires a license (plumbing and electrical are two examples) or by someone regularly employed in a trade that reflects what they are doing. In other words, if you hire a handyman to fix items on a repair amendment, they need to be a handyman as their regular job, not just Uncle Bob who says he can fix it. These two requirements can be overruled if agreed to by both parties and put into writing.

The more precise you are with repair amendments, the better your results will be. Remember to think items through as well, what are the consequences of the action you’re requesting? We see a lot of arguments over removing items like TV brackets. If someone requests “remove TV brackets” on a repair amendment, they might get exactly that. What’s left when you remove TV brackets? Big holes and mismatched paint. You may want to use something more along the lines of “remove TV brackets and repair, patch, texture, and paint to match current walls” so that you have a more detailed explanation of what you want to be done. Remember, there is no “they should have known what I meant” clause in contracts.