Pricing a home correctly is widely considered to be one of the important factors in listing a home. To successfully sell a home, an accurate price must be in place to compliment a solid marketing strategy. Study after study points to the fact that a home’s value decreases the longer it’s on the market. That is why pricing your home accurately from the beginning will typically generate increased activity from buyers and potentially higher offers. Contrary to the popular belief that a higher list price will yield a higher sell price, overpricing can actually drive the value of your home down because it will sit on the market longer. These days, buyers have access to the same information as REALTORS® and are not fooled by an overpriced home; they will typically steer away from it if they believe the price is too high.
Take a look at 5 things to consider when it comes to pricing your home.
1) Comparative Sold Properties
Analyzing recently sold comparable properties, or “comps,” is the key method for determining market value. However, in a volatile market like 2024, other factors must also be considered. For example, if a home sold for $500,000 in January when inventory was low and interest rates were high, that same home might need to be listed for less today to attract buyers—especially if inventory has increased while affordability remains strained due to sustained high mortgage rates. Typically, comps are pulled from sales within the past six months, but in rapidly shifting market conditions, looking at more recent sales may provide a clearer picture of current home values. When reviewing comps, it is necessary to look at the date the offer was accepted on a home because you must consider what the market was like at that time.
The search radius will be determined by how highly populated the area is. For example, if you are close to Boston, you may only need to search a half or a quarter mile radius because it’s densely populated. If you are in a more rural area, you may need to search a radius of a mile or two wide to obtain a higher quantity of home information. It’s important to note too that the sale price listed for a home isn’t always the actual sale price. The price shown on listing sites doesn’t always include closing costs or concessions, making the listed sale price inaccurate. The MLS listing can give you a more accurate sale price for the homes in your area.
Your real estate agent can also help in pricing your home – they know a lot about the area your home is in and will work with you to recommend a fair price based on the homes around you.
2) Under Agreement Date of Sold Properties
When reviewing comps, it is necessary to look at the date the offer was accepted on a home because you must consider what the market was like at that time. If the market exhibited low inventory, the sale price may have been driven up because buyers likely competed for the home. On the contrary, if the market exhibited high inventory, the sale price would have been driven down because sellers were likely competing for the sale. Every year from June through September, home sellers see what their neighbors’ homes sold for that past winter and they want to price their homes for the same amount or sometimes even more. Winter and spring’s low inventory and higher sale prices should not influence summer or fall’s listing prices because inventory is generally higher at that time of the year. Especially in this market, it’s important to remember that even comps from earlier this year may not be the best point of reference when deciding your price. The market has gone through many changes over the past few years and having the comps from a time most reflective of the current market is important!
3) Comparative Active Properties
Looking at other homes that are currently for sale in the area is a great way to see where your property would fit in and how it would compare. Marketing and attractively pricing your home to create a sense of urgency is the key to beating the competition and selling your home. Many sellers compare their homes to the other active homes and want to price above them. If a home similar to yours is on the market and isn’t selling you should not list your home for that price and certainly don’t list it higher. Instead, you should list lower than them to give yourself a competitive advantage!
4) Current Inventory
Real estate is all about supply and demand which is why this is also very important. This consideration is very similar to #3 because it is again about competition. When inventory is low, sellers typically sell for more as explained in our blog about how sellers should list in the Winter to sell for the most money. Ask your agent for reports on how inventory is in your entire town and the abutting towns. The higher the inventory, the more choices buyers have and the less they will be willing to pay. The lower the inventory, the more they will pay.
5) Market Condition
Since 2016, early-year inventory has seen record declines, with 2018 and 2019 hitting record lows. The COVID-19 pandemic in 2020 sent the market into a frenzy—homes sold rapidly amid historically low interest rates, driving intense competition through 2021. In 2022, inventory remained low but began increasing, easing competition. However, 2023 saw the fewest homes listed in over two decades, keeping prices high despite a 22% drop in sales, with serious buyers still active. And finally, in 2024, the market experienced slightly more sales and higher prices than in 2023, mirroring national trends influenced by strong demand and limited inventory. While many sellers hesitated to list due to low pre-pandemic mortgage rates, increased activity rose from necessity and life changes, making competitive pricing crucial as determined buyers navigated affordability challenges from rising rates and home prices.
If you have to sell your home at a time when market conditions are inhibited, all the same considerations above apply but you will likely have to price more competitively in order to sell. If your home is listed and not selling, we recommend you visit our blog on adjusting the price of your home.
You’ll see in the charts below that inventory in the Northeast tends to start the year at a low point. By spring, it rises and continues its ascent to its peak, usually in the summer. Then, for the rest of the year, it declines back down to January lows. In contrast, South Florida doesn’t experience the same seasonality due to its climate. Inventory starts higher in January and gradually diminishes throughout the year, typically influenced by snowbirds and tourism.
In Closing
Try not to overthink or allow emotion to dictate your price. It’s a business transaction first and foremost. The market right now is strong and is getting stronger day by day. If you price within reason and market correctly, your home will sell. Knowing how much competition you have should determine how aggressively you and your agent price your home. Do your research and price competitively.