Listing price: How to price your home for sale

A listing price is the initial amount that a home is put on the market for sale. It’s a reflection of the property’s perceived market value and acts as a starting point for negotiation when selling your house. Setting the right list price can be challenging, as sellers navigate feelings of sentimentality, understanding market trends, and assessing their home’s condition.

Many sellers find it difficult to determine the ideal price on their own, which is why enlisting the help of a real estate agent is crucial. Your agent can provide expert guidance in establishing a competitive price that attracts potential buyers, minimizes days on the market, and maximizes your profit.

What is the listing price?

A list price is the seller’s asking price for their home. It’s the number that appears on property listings and what real estate agents see when browsing the multiple listing services (MLS). It serves as the starting point for potential buyers and their agents to decide whether to schedule a viewing or make an offer. In short, the list price reflects the seller’s target sale price for the property.

‍

A home's list price may change throughout its time on the market based on factors like buyer interest, market conditions, or feedback from showings. Sellers might lower the list price to attract more interest or adjust it if comparable homes in the area are selling for more. 

Listing price vs. selling price: What’s the difference?

An important distinction to note is that the list price is not the same as the sale price of a home. While the list price is the seller’s asking price, the sale price is the amount a buyer actually pays for the home.

The selling price of a house can be lower or higher than its list price. In the real estate boom of the early 2020s, sale prices were generally at or above list prices due to record levels of demand. June 2024 was the first month since 2020 when the typical house sold for less than its listing price – although, the difference between the asking and selling price was just 0.3%.

This selling price can be impacted by a number of factors, like:

• Market conditions: If it's a seller's market, with high demand and limited inventory, prices can be driven up as buyers compete for fewer available homes. Conversely, in a buyer's market with more inventory, sellers may need to price more competitively to attract interest.
• Appraisal issues: If an appraisal comes in lower than the agreed-upon price, buyers may hesitate to move forward or negotiate a lower price. Lenders may also decline to finance a property that’s priced higher than its appraised value, potentially forcing sellers to lower the final selling price.
• Competition: In highly desirable areas or for unique properties, multiple offers and bidding wars can push the selling price above the original listing. Competitive offers may also drive up the price if buyers waive contingencies or add escalation clauses.
• Presence of investors and iBuyers: Investors and iBuyers can influence pricing, especially if they’re actively purchasing in a neighborhood. These companies often deal in cash offers and streamlined processes that can push prices up and put pressure on traditional buyers, especially in high-demand areas.

Who prices the home?

The seller ultimately decides on a listing price. However, pricing is often best left to a real estate agent's professional expertise. Sellers can struggle to put a dollar amount on something as sentimental as their home, while agents are able to apply the lens of their training and experience.

Agents use extensive data to determine an accurate list price. They consider current market conditions, analyze the sales histories of nearby homes, and perform a comparative market analysis (CMA) to review comparable properties. This helps them set a list price that balances attracting buyer interest with meeting the seller's expectations.

That’s not to say the seller’s perspective isn’t needed. Finding the right list price requires collaboration between the seller and their real estate agent. As such, it should be one of the key questions to ask the agent selling your home.

How to determine your list price

Setting your list price is a big step in the homeselling process that can significantly impact your success. Consider factors such as market conditions, comparable sales, and your home's unique features, to set a competitive price that attracts buyers and maximizes your return.

Research comparable homes

Researching comparable homes, or "comps," is a key step in accurately pricing a property for sale. By looking up homes in your neighborhood that have recently sold and are similar in size, condition, and features, you can gauge current market trends. This comparison gives insight into what buyers are willing to pay, helping you set a realistic, competitive price. Reviewing comps can also highlight pricing patterns, showing whether homes with certain features, like updated kitchens or extra bedrooms, sell for a premium.

A real estate agent’s perspective is especially valuable when researching comps, as they bring an expert understanding of what qualifies as a comparable property. The criteria for a comp can be surprisingly narrow — often limited to homes within a small radius, similar square footage, and recent sale dates. An agent can identify subtle but critical differences, such as how proximity to a busy road or a recent renovation impacts value.

Consider your home’s unique features

Unique features like a pool, extra bedroom, or a spacious backyard can add value to your home and make it stand out among comparable homes. Identifying these upgrades or distinctive amenities can help justify a higher asking price, especially if they align with what buyers in your market are seeking. When setting your list price, be sure to factor in the desirability and rarity of these features, as they can significantly influence what buyers are willing to pay for your home.

Assess market conditions

Understanding local market conditions is crucial to pricing your home. Start by determining if the current climate is a “buyer’s market” or a “seller’s market.” In a seller’s market, where demand outweighs supply, you can often price your home slightly higher, as competition among buyers may drive offers up. Conversely, in a buyer’s market, with more inventory and less demand, setting a competitive price from the start is key to attracting attention and securing offers.

Note that while market conditions trend nationally, they’re best understood on the local leve. Your real estate agent will be able to offer specific insights into the market conditions in your neighborhood.

Use online valuation tools

Using online valuation tools can be a helpful first step in estimating your home’s value. Reputable platforms like Zillow or Orchard provide rough estimates based on data from recent sales and local market trends. While these tools aren't always precise and may not account for unique features or condition, they can offer a baseline idea of your property’s worth.

Enlist the expertise of a real estate agent

Realtors have specialized tools and access to up-to-date market data that provide a clear picture of what buyers are willing to pay for a property. By leveraging their insights and resources, they can identify trends and fluctuations that might not be visible to the average homeowner. Work with your agent to find a list price that makes sense to both of you, and trust that the numbers they suggest are backed by data and experience.

How can you increase the sale price of your home?

You can’t move your house, change the market, or create demand where there isn’t any. But you can make material changes to your house that increase its value. Here are a few ideas to get you started:

• Upgrade your kitchen: Kitchens are often the centerpiece of a home, and even modest updates like new countertops, cabinets, or appliances can yield a high return. Updating your kitchen ranks as one of the home improvements with the best ROIs, making it a solid choice.
• Refresh the bathrooms: Bathroom remodels consistently boost value. Updating fixtures, installing new tiles, or replacing an old vanity can give a fresh, clean look that buyers love.
• Enhance curb appeal: First impressions matter. Improve landscaping, add outdoor lighting, and repaint the front door to create an inviting exterior that attracts potential buyers before they even step inside.
• Increase energy efficiency: Install energy-efficient windows, upgrade insulation, and replace outdated appliances. Energy-saving features are highly attractive to buyers looking to reduce utility costs, and they can increase your home’s appeal and value.

Home improvements can be a lot of work, though. If you want the material advantage of these improvements without the hassle, consider using Orchard’s Concierge service. Our team will manage essential home improvements, including landscaping, repainting, and larger projects like kitchen upgrades, to boost your home’s value before — all with no out-of-pocket cost to you.

Interested? Learn how one family used Concierge to list their home for $7,000 more than their original asking price.

FAQs

Here are answers to the most commonly asked questions about listing price.

What is the difference between original price and listing price?

The original price is the initial amount a seller sets when listing a property, while the listing price is the current price at which the home is marketed. The listing price can be adjusted based on market conditions, competition, and buyer interest to attract potential buyers.

How do you calculate the price of a house?

It’s best to lean on the expertise of a real estate agent to determine the price of a home. To calculate the price of a house, consider factors like location, size, condition, and recent sales of comparable properties (comps). You can also factor in upgrades and market conditions, and use online valuation tools or a real estate agent for guidance.

What's the best strategy for pricing a home?

The best strategy for pricing a home involves researching comparable properties, assessing current market conditions, highlighting unique features, and considering expert input from a real estate agent. Aim for a competitive price to attract potential buyers quickly.

Can you sell above list price?

Yes, you can sell above the list price, especially in a seller's market where demand exceeds supply. Competitive bidding among buyers can drive the final sale price above the listed amount.