In this article, I will share the real estate pricing pyramid that will help you price your home accurately so that it sells fast. If you price your home too high above the fair market value, you are discouraging potential buyers not to look at it or having a tour of the house.
On the other hand, if you price your house below fair market value, you are encouraging anyone to call you and give proposals unlimitedly. It will become a big frustration for you, and you will end up selling the house for a low price by taking a huge loss.
That is why you must use this real estate pricing pyramid to identify the fair market value for your house, where you only get qualified buyers and can make a profit soon. So let’s understand what it is and how you can use it.
What is this Real Estate Pricing Pyramid
It is a level-based infographic that shows the relationship between the asking price compared to market value and the percentage of buyers who will look at the house or have a tour.
Many professionals use this metric to give a house a certain price, but you can hire an analyzer or an inspector to get a more accurate valuation. But for assumption, this real estate pricing strategy is the best. Here is what the Pricing Pyramid chart looks like.
Table of Contents
| Asking Price Compared to Market Value | Percentage of Buyers who will Look at the House |
|---|---|
| +15% | 10% |
| +10% | 30% |
| Fair Value | 60% |
| -10% | 70% |
| -15% | 90% |
The pricing pyramid shows the balance in determining your home’s fair market value. As the asking price increases above fair value, the percentage of potential buyers who will look at the property decreases gradually. And when the asking price of it starts to go down the fair market value, the percentage of potential buyers who will look at the property increases with it.
Some people might argue that it is a sales pitch designed by greedy agents to scare homeowners into under-pricing their homes, as there are no official data from any government organization that supports the pricing pyramid. That is why, when deciding the market value, also look for other factors, as this pyramid will only give an assumption, not the financial price.
Real Estate Pricing Strategies
When determining the fair value, do not hurry, be patient and try to understand the current real estate market and housing trends in your local neighborhood. Get an overview of a similar house in your area and learn its fair market value. Try to find answers to these questions.
- Are home prices in your neighborhood up or down, and why?
- The condition of your house. How good is it from the inside and outside?
- Do you need money soon, or can wait?
- Is there any problem with your house that you can not solve now?
- Are there a lot of homes that did not get sold within due time?
- What is the lowest price you will agree to sell it?
These questions will try to break down your inner need and why you want to sell it. When you know what exactly you want, it will become easy for you to price your house accurately using this real estate pricing pyramid.
But you can also ask your real estate agent or hire a home inspector to analyze the house and give you an estimate via his comparative market analysis. If you don’t know how to do the pricing, then it is best you hire a professional. You may get more money than you previously thought.
The Best Way to Price Your Home
Housing market research says in April 2022, the average purchase price of a new home was approximately $450,000. It is an increase of almost $74,000 from the same month in 2021. More than 60 percent of home purchases are bought through conventional borrowing, and 1.3 million new home starts are forecasted this year.
The analysis has found after analyzing these points how affects the real estate pricing for a seller.
- They saw some sellers pricing their homes higher than ever. It is driving away serious buyers.
- NAR says the highest offer is not the best offer. Go for cash options that could work in your favor.
- Hire a good realtor to help you navigate this seller’s market.
Price your house in the right segment, and you will sell it quickly, or else it will remain unsold for a long time.
Last Words
So this is what the real estate pricing pyramid is and how you can price your house accurately by using this. I have shared all that. But do hire a professional if you don’t know the process and don’t have the time to analyze the market. The pricing pyramid is an assumption, not official data, not a rule. I hope this article helped you. Thanks for making it to the end. See you soon.
