When the real estate market crashed in 2008, new home builds came to a screeching halt. As a result, fewer homes were built over the next ten years, flinging the United States real estate market into a severe housing shortage—a 3.8 million unit deficit by 2019. Not quite a year later when the pandemic struck, and a material and labor shortage ensued, creating a perfect storm of surging prices and a supply and demand crisis. And now that the pendulum is beginning to swing toward the center, sellers are scratching their heads, trying to understand how to navigate the current real estate market shift.

Pricing your home to sell

With the real estate market being so unpredictable, many home sellers are still determining how to price their homes. It will take thought, calculation, and research to arrive at a fair price—not too high to scare off potential buyers, but not too low that you’re leaving money on the table. Here are some of the biggest factors to consider when figuring out your asking price.

Buyer attitude
As the market continues to readjust, buyers have become more selective with their homebuying decisions. Sellers can no longer expect them to pay over the asking price, waive home inspections, or remove contract contingencies. So if you’re considering selling your home in 2023, fairly pricing and properly prepping your home to go on the market will be essential. When staging, be sure to showcase the advantages and special features of your home. Remember, a buyer’s first impressions can directly impact how long it will take to sell and the final sale price.

Market trends
The best way to establish a reasonable listing price is by examining the most recent market trends. Is it pointing toward a buyer’s market, or are trends favoring sellers? You can easily access this information through the National Association of REALTORS® which reports monthly, quarterly, and annually on market activity. You can then gain a firm understanding of where the trends are heading and, with the assistance of your real estate agent, you can determine the best approach to your pricing strategy.

Interest rates
Buyers are usually able to spend more when rates are low, which ultimately leads to a seller’s market. That’s when there are more buyers than sellers and less inventory—and as demand increases, so does pricing. In late 2022, when the Federal Reserve raised interest rates, buyers began to pull back, resulting in a significant dip in real estate sales. So If selling is on your agenda for 2023, remain informed of the status of interest rates, as it will likely determine your pricing strategy.  

Home evaluation
Several real estate sources like Zillow.com and Realtor.com will provide an estimated home value. However, these sources generally overestimate value, so you may want to consider doing some preliminary research with an automated valuation model. This online algorithm extracts information from various real estate websites to provide an estimated value of your home. It can be a great jump-off point to help you price your home to sell for the most money in the least amount of time. Just keep in mind that these valuations are only guestimates; they don’t know your home’s condition, upgrades, or lot location. Your best bet will always be to consult with a real estate agent who can personalize your valuation by considering all its elements to arrive at a fair, marketable listing price.