There is a shortage of housing inventory in today’s market — a drop of 43%, according to one study. That means it’s a seller’s market. And many buyers are willing to pay more than the listed price to score the home of their dreams.
Of course, if you want to get the most money from the sale of your home, you need to do your part. Here are 3 ways to sell your home above its list price.
1. Set your price to generate multiple offers.
Even though you want to make the maximum amount of money from your home sale, it’s vital that you not over-price your house. There are several reasons why an excessive list price could hurt you in the long run, including:
- A smaller audience. Many homebuyers search within a price range. If your list price is way above what a reasonable person would pay for your property, then you’ll lose out on a big chunk of your audience.
- Bad optics. If your house doesn’t sell week after week, month after month, then many of your prospective buyers may start to think something is wrong with it. And if you drop your listed price multiple times, you may gain a reputation as a seller with unrealistic expectations — which is the last thing you want.
- Extra expenses. If it takes a long time for your home to sell, then you may end up paying additional expenses for storage, temporary housing, etc. This is especially true if you’re under a time crunch, and need to sell by a deadline.
With all that being said, you’ll probably want to list your house around its fair market value. If you do, you’ll no doubt generate a lot more offers from a broader audience. Once there’s competition for your house, you’ll be in a position to leverage multiple offers into a higher price tag.
2. Understand the value of escalation clauses.
An escalation clause is a type of real estate contract (or section of a contract). In which the buyer agrees to increase their offer price in the event that the seller receives a higher offer from someone else.
Using an escalation clause may be appropriate when you feel confident about receiving multiple offers on your home. It may motivate potential buyers to outbid one another and simplify the decision-making process.
Of course, an escalation clause may also scare away buyers. So, make sure that you understand the risks as well as the benefits of using this language in your contract.
3. Explore appraisal gap guarantees.
In simple terms, an appraisal gap guarantee is when the buyer agrees to pay the difference if your home’s appraisal comes in lower than its listed price. An appraisal gap guarantee can offer you a measure of protection as the seller. And can keep negotiations on track even if your house is appraised at a lower price than you expected.
As with the escalation clause, however, many buyers may shy away from contracts with an appraisal gap guarantee. Some buyers may insist on an appraisal contingency in their contract. Which is the opposite of an appraisal gap guarantee (the buyer can back out of the deal if the appraisal price is lower than the agreed-upon purchase price).
The 3 suggestions discussed above can help you to sell your home at above its listed price. However, navigating all the intricacies of the real estate market isn’t easy to do, especially by yourself. If you want to obtain the highest possible price for the sale of your home, don’t go it alone. Reach out to the Path & Post Team today.