6 Go-To House Pricing Strategies Used to Sell Real Estate

Pricing a home in 2024

While experts do not expect a housing market crash to occur in 2024, someone selling a home this year should not base their house pricing strategy on the dynamics of the hot seller’s market of 2021-2022. It will be necessary to keep close track of any changes in the market with the help of your real estate agent.

House pricing strategy #1: Start with a free online home value estimate

It used to be that the only way to access information about pricing your home would be to pay a few hundred dollars for an appraisal or ask a real estate agent’s opinion.

Today, detailed property data is widely available online. Sellers now have a head start with the ability to do more preliminary research and access relevant data about their home in an instant.

You can begin the process of researching how to price your home with a tool like HomeLight’s Home Value Estimator.

Answer a short questionnaire to tell us a few details, such as:

• Are you thinking of selling soon?
• What is the condition of your home?
• What type of property is it?
• When was the home built?

Our tool then pulls publicly available data, your home’s last sale price, current market trends, and recent sales records to provide you with an estimated range of value for your home in less than two minutes — all free.

However, you’ll need to follow up your online home value estimate with a real estate agent’s expertise for accuracy purposes to ensure your estimate takes into account recent upgrades and location factors, such as road noise, nearby power lines, and school district quality.

House pricing strategy #2: Look to comparable sales for guidance

Property values are hyperlocal and always shifting, so agents and appraisers rely on comparable sales, aka “comps,” to price individual houses and capture recent changes in the market.

What’s a comparative market analysis?

A comparative market analysis (CMA) puts your home side-by-side against other recently sold properties that are similar in location, condition, and size.

A detailed CMA may run 30-plus pages and cover:

• A deep dive into the subject property, including any recent photos and new features worth mentioning
• Somewhere between 10 to 12 comps within a certain radius of the property, and details for each
• A summary page detailing the sale prices of each comp
• A map of all included listings
• Charts and tables that show market trends data, such as inventory numbers for the area and average price per square foot

Can you do your own comps?

You can do your own comps analysis, but a top real estate agent will have experience putting together hundreds of CMAs. They will be more accurate and efficient in pulling the right data and making dollar adjustments based on competitive differences.

For example, Dominguez deals with a lot of bungalow-style homes of about 2,000 to 2,500 square feet, where additions or upgrades can increase the asking price by $100,000 to $150,000.

“When you add an addition or a coach house, it obviously brings value because it allows a lot more living space and maybe potentially an Airbnb opportunity or rental,” he says, adding that it’s important to “present the comps, see what’s actually selling in the area, and price comparably.”

If this sounds like a lot of work, it is. But HomeLight makes it easy to find a top real estate agent near you who can perform a thorough CMA and help you set a spot-on price from the start.

How do you price based on comps?

Say you had a CMA with about a dozen listings. The summary page might look something like:

• Lowest price: $575,000
• Average price: $621,318
• Highest price: $690,000

If your house appears to be a bit better than average, and the market is heating up, perhaps you price around $650,000. Or maybe the photos clearly show that the comps are more updated than your inherited home, which hasn’t been refreshed in decades.

That might put you on the lower end of $575,000 to account for work needed on the home. But such a range would help you see that pricing anywhere above $690,000 is going to be way out of line, while going higher than the $620,000 average should be supported by your house having some competitive advantages.

“My emotional sellers have been in their homes for generations when their parents owned that property,” says Loretta Thomason, a top-selling real estate agent in Austin, Texas. “But, when new developments take over certain areas of town, and they see everybody else selling their homes, and the houses have been remodeled, sold for $400,000, they’re not taking into account that there’s $150,000 of work that’s been done.”

House pricing strategy #3: Use the real estate pricing pyramid

This long-held real estate pricing strategy considers the relationship between your home’s asking price and the percentage of buyers likely to look at your home. In general, the higher you price your home above market value, the smaller your potential buyer pool gets.

You and your agent can discuss where to start on the pricing pyramid and why. For instance:

Price at market value

Most sellers will aim for an appropriate list price at current market value, drawing in roughly 60% of active buyers. Remember, buyers and their agents research market value too, so you want to hit the sweet spot in price.

According to the National Association of Realtors’ (NAR) 2023 Profile of Home Buyers and Sellers, buyers typically purchased their homes for 100% of the asking price, with 25% purchasing for more than the asking price.

Cooler markets and greater inventory would make it less likely that buyers purchase their homes above asking price.

Price just below market value

Pricing 10% to 15% below market value opens the potential buyer pool to 75% to 90%, according to the pricing pyramid — a sound strategy to generate more traffic when your property is unusual or your area has few recent comps.

Dominguez strategically priced a home in Park Forest, Illinois, a village south of Chicago, at 15% to 20% below market last year because the community is so small (population: about 21,000), he had to stretch out the comps over several months. It sold for about $50,000 above asking price, which was 20% above market value, he says.

Price above market value

It’s rare to price your home about 10% to 15% above market value because it narrows the potential buyer pool to as low as 10%. But sometimes your agent might find this appropriate.

“We price the houses a bit higher when they’re in a good school district or there’s other added value to the property that the comps don’t have,” Dominguez says.

However, “it’s very risky,” he says. While he might start at about 10% above market value in such cases, he’ll recommend lowering the price after two to three weeks if there’s no interest.

“I always ask my sellers not to overprice, but if I feel like they’re going to, I get a commitment from them upfront that they will reduce the price within 10 to 12 days after it’s been on the market,” Thomason adds.

House pricing strategy #4: Adjust for online pricing benchmarks

Part of a 2024 house pricing strategy is to consider where buyers primarily shop for homes: the Internet! Recently, 100% of all buyers used online tools in their home search process, and 41% of recent buyers said their first step in finding a new home was to look online.

Once you have an asking price in mind, tweak it ever so slightly to make sure that it will show up with the greatest frequency when buyers are searching for properties like yours and in your price range.

For example, many online real estate sites set price filters in $25,000 increments. So, if you list your home at $352,000, buyers who filter their maximum price at $350,000 may not see it, even though the home is well within their budget.

House pricing strategy #5: Follow the seasonal shifts of your market

Conventional wisdom suggests that the best time to sell a house is in the spring, when the balmy weather beckons people outdoors. Yet local real estate transaction data can vary drastically from national trends. 

HomeLight’s Best Time to Sell Calculator analyzes nine years of data to estimate the best time to sell a house in your area. The tool provides suggestions for the ideal time to sell your house for more money, as well as when homes historically sell the fastest in a particular market.

Based on our data, for instance, September is the best time to sell in New York City, when you could earn 10.03% more than the yearly average. Meanwhile, June is the best time to sell your house fast in Los Angeles, when homes sell almost six days sooner on average, according to our internal transaction data.

A skilled agent can find the benefits of listing anytime, though. Our data shows that June is the best time to sell a Chicago home fast, but Dominguez says that he’ll find more serious buyers in the wintertime when people are “willing to put on their jackets and boots and look at your property” compared to “window-shopping buyers” in warmer weather.

House pricing strategy #6: See what a cash buyer would pay

No matter where you set your price, a traditional sale typically requires some level of effort to prepare, stage, and show a house until an offer comes together. However, some sellers need more certainty about when their home will sell and are looking for an easier solution.

The most straightforward alternative may be to request a cash offer from an iBuyer (a company that uses pricing technology to make a near-instant offer on your home). Essentially, you provide a few details about your home, the iBuyer names their cash price, and then you decide whether you want to accept or decline the offer.

If this route interests you, consider requesting a cash offer from HomeLight’s Simple Sale platform. Rather than do the work of pricing your home, you will answer a few questions, such as how much work the home needs and how soon you plan to sell, so we can learn a little bit more about your situation.

In as little as 24 hours, we’ll provide you with a full cash offer, with the ability to close in as little as 10 days. By contrast, a transaction involving financing typically takes 44 days to close in today’s market.

Pick the right strategy (or strategies) to price your house

Pricing your home does involve quite a bit of analysis and strategic thinking. And you don’t have to pick one strategy. In fact, when you combine an approach that uses comps, the real estate pricing pyramid, and is cognizant of online price filters — you’re likely to arrive at a competitive price that works to attract buyers.

To stay on track, remember the following tips:

• Request a free home value estimate from HomeLight as a starting point to get oriented with local property values.
• Hire a top real estate agent who can perform an in-depth CMA that looks at the sale prices of recently sold homes with similar characteristics.
• Lean into your agent’s expertise regarding which home features add value (such as a well-maintained patio or new bathroom) or adjust value down (such as an older roof or dated finishes). These will be specific to your neighborhood and depend on how nearby homes measure up.
• To skip the hassles of pricing and showing your home, consider the alternative of working with a cash buyer and request your home’s Simple Sale price.

With these house pricing strategies in mind, you’re less likely to pick an inflated number to the frustration of buyers who may love your home but feel that you’re overpriced, or undersell your home when you’ve recently put a lot of work into it.

Header Image Source: (Tierra Mallorca / Unsplash)