With the crazy real estate market we are experiencing in Bozeman currently, it's hard to know what your home is worth! Home values have gone up in Bozeman 28% in the last two years and every day we see another home go on the market for a surprising price. Million-dollar homes in Flanders Mill are becoming the norm and heading to Belgrade for something more affordable is no longer an option. With so much discussion about the lack of inventory, it’s easy for sellers to want to list at the highest price possible. However, even in a seller’s market like we’re experiencing in Bozeman, it’s important to price your home appropriately.
1) Be cautious about pricing high
In a market like Bozeman’s most sellers want to price high, knowing that most homes are going for over asking. However, this isn’t always the best strategy. Pricing too high can mean the house will spend more time on the market, which doesn’t reflect well when everything else is going under contract quickly. The other risk with pricing too high is the home still has to appraise for that price if your buyer is getting financing. This is something we are seeing happen in Bozeman. Homes not appraising for what they are going under contract for and then the sellers either have to reduce the price or buyers have to come up with the difference. Of course, we are seeing an increase in cash buyers which eliminates this problem, but that’s not always the case.
2) Pricing low to create a bidding war doesn't always work
Another thought process for some sellers is pricing low in hopes of starting a bidding war. Escalation clauses and bidding wars are becoming common practice in Bozeman. There are a couple of problems that can arise from this. The first is having too many options to choose from and having to navigate through all of them! Trying to decide if you should take the highest offer or the one with the least contingencies. Do you take the one that wrote a letter that's on their 10th offer or the cash deal? The other problem with this could be it may not entice a bidding war. Even in a crazy market, you might just get one or two offers at the asking price. Both of these are things we are currently seeing happen in Bozeman’s real estate market so it is something to keep in mind.
3) Don't rely on the internet
You might think because Zillow is a huge real estate company that the Zestimate you got on your home is accurate, but that is not the case. Montana is a non-disclosure state, so no one has access to the sold prices of a home other than members of the MLS, which means Zillow cannot give you an accurate price of your home. Zillow and other automated valuation models online gather data to guess the value of your property by looking at location and things like square footage and the number of bedrooms. But, to get the clearest idea you have to go off what similar homes have sold for in your market
4) Consider renovations and upgrades
Using what comparable homes have sold for is a big piece of the pricing puzzle, but they aren't the only thing to consider. If you have done renovations or upgrades that add value to your home, it needs to be taken into consideration when pricing. Remember, not all renovations add value, and home projects can be costly. Sellers don’t always get out what they put into a home reno project. Talk with your agent about any projects you’ve done to your home to see if they can add to your asking price.
5) Work with a real estate agent to determine the listing price
An experienced real estate agent will help you determine the best price to list your home at. They can provide a comparative market analysis that gives an accurate representation of what your house is worth. In our office, agents work collaboratively and often discuss with each other pricing a home to get multiple opinions. In a market like Bozeman’s, this insight from other experts can really help zero in on the best price. An agent will also be the one to help you negotiate multiple offers, contingencies, and escalation clauses, all the extra work that has come along in our current market.