How to Avoid Underselling Your Home

Nobody wants to undersell their home. But somewhere between getting a home ready to sell and closing the deal, you just want it done. The stress of repairs, the urgency to get to your next home, the fear of a deal falling through—it all adds up. That’s when the numbers take a back seat and sellers start leaving money on the table.

 

What Causes Sellers to Undersell Their Home?

Sellers often set themselves up to undersell their homes by making common mistakes like these before the For Sale sign goes up:

Emotional Pricing

You’ve baked your kids’ birthday cakes in that kitchen. You’ve hosted countless holiday gatherings in that living room. You taught your kids to ride their bikes in that driveway. The stories of your house are meaningful to you but invisible to a buyer.

Sellers who let emotions drive their listing price end up getting frustrated by “low” offers that are actually right on the money. They reject the offers, and the house sits. In a panic, sellers then drop the price to get it sold. Instead, set your price right from the start based on solid data and research. We’ll cover how to do that a little later.

Overspending on Upgrades

Thinking about a full kitchen renovation with shiny stainless steel appliances and gleaming countertops to make your online listing pop? That might sound like a great investment before selling. Sometimes it is. More often it’s not. High-end upgrades in a midrange neighborhood rarely increase a home’s value dollar for dollar—the return on investment (ROI) just isn’t there. Buyers in that price range aren’t paying a premium for quartz countertops.

Scott from Atlanta called The Ramsey Show for advice about doing a $130,000–150,000 renovation before he put his home up for sale. He hoped the renovation would help him sell his house for $400,000. The alternative was listing it as is for $300,000. Dave Ramsey told him to skip the renovation, sell it as is, and be done with it. His reasoning: The renovation would be a money pit of hassle, delays and cost overruns—and for what? A house that might net Scott no more—and possibly less—than just selling it as is today.

Be strategic about your pre-listing prep. Painting walls, cleaning up landscaping, fixing issues an inspector would flag—those kinds of repairs protect your proceeds and make your home easier to buy. No renovation necessary.

Before spending money on upgrades, it’s important to know which home improvements actually pay off before selling.

Trusting the Wrong Sources

Everybody’s got an opinion about the housing market. But you don’t need opinions when pricing your home. You need data. And no, Zillow’s Zestimate doesn’t count. A Zestimate is an algorithm-generated estimate based on publicly available data. It doesn’t account for your home’s actual condition, and it can be off by tens of thousands of dollars. That’s not the kind of reliable information you need to avoid underselling your home.

Even real estate agents can be a problem here. Some will tell you what you want to hear on the front end to win your listing—then push you to drop the price once the house sits on the market awhile. That’s called overpricing to win the listing, and it’s a trap. But we vet RamseyTrusted agents for integrity, so they’ll set honest expectations on pricing from day one.

Price your home based on what similar homes recently sold for in your area, not opinions.

Ignoring Your Net Proceeds

The term net proceeds refers to the money sellers walk away with after paying off their mortgage, covering agent commissions, and handling closing costs. That money funds your next move, your next home, your emergency fund or your retirement. Once you have a price based on similar home sales, run this math before you list. If the numbers don’t cover your mortgage payoff and fund your next move, you need to know that before you put a sign in the yard.

Rushing to List Before the Home Is Ready

Sellers who list too fast overlook important repairs, take shortcuts on the staging process, and skip research on pricing. Those are the mistakes that cause a home to sit on the market. The longer it sits, the more buyers assume something is wrong—and that gives them more leverage to use against you in negotiations.

A home that’s priced right, has had a pre-listing inspection, and is staged to show well can attract strong offers in the first two weeks on the market. That two-week window is often your best shot at selling for full price. And that makes it worth spending the extra time to make sure your house is ready to list.

Misjudging the Market

Home prices are driven by supply and demand. Both shift constantly and are different for every local market. What homes sold for two years ago and what’s happening at the national level won’t tell you what your home is worth today in your neighborhood.

Sellers who base their price on a different time, a different market or national housing headlines often end up overpricing their home—or underpricing it out of fear. The only number that matters is what similar homes are actually selling for in your area right now.

Doing For Sale by Owner (FSBO)

For Sale by Owner simply means you’re selling your house without hiring a real estate agent. You might think you’d walk away with more money by skipping the agent commission. But FSBO homes consistently sell for tens of thousands of dollars less than agent-assisted homes.

Data from the National Association of REALTORS^® shows that FSBO homes sold for a median price of $360,000, compared to $425,000 for agent-assisted homes—an 18% difference.¹ Even after paying agent commissions, you still walk away with more money than you would by selling the home yourself.

How Do You Set the Right Price for Your Home?

Follow these steps and you’ll set a listing price that’ll attract buyers and get the most out of your home sale.

1. Get a comparative market analysis (CMA).

A CMA is a free report a real estate agent uses to estimate the value of a house by comparing it to sales prices for similar homes (called comps). The analysis should include three to five comps that closed in the same neighborhood within the last 90 days. No homes are identical, so your agent needs to adjust the prices for differences in size, condition and features. Here’s a simple example of how that works:

Your Home

• 1,500 square feet
• 3 bedrooms
• 2 baths

Comparable Homes

	Comp 1	Comp 2	Comp 3
Sales Price	$380,000	$415,000	$395,000
Square Feet	1,400	1,600	1,500
Beds/Baths	3/2	3/2	2/2
Adjustment	+$10,000 (size)	-$10,000 (size)	+$15,000 (bed)
Adjusted Price	$390,000	$405,000	$410,000

Notice how your agent adjusts the sales price of the comps based on how they differ from your home:

• Comp 1 is 100 square feet smaller, so your agent bumps the price up $10,000.
• Comp 2 is 100 square feet larger, so your agent brings it down $10,000.
• Comp 3 is short one bedroom, so your agent adds $15,000.

After price adjustments, the comps range from $390,000–410,000. Pricing significantly under $390,000 likely means you’re leaving money on the table.

 

2. Calculate your net proceeds.

Next, figure out how much money you’ll actually walk away with after the sale—your net proceeds. Here’s the formula:

Net Proceeds = Sales Price – Agent Commission – Closing Costs – Repair Credits – Mortgage Payoff

Here’s an example of how that math works on a $400,000 home:

Estimated sales price	$400,000	Based on your CMA in the previous step
Agent commission (6%)2	-$24,000	If you choose not to cover the buyer’s agent fee, the commission could be half that
Closing costs (1–3%)3	-$12,000	Cover expenses like title fees, transfer taxes, prorated property taxes and attorney fees
Repair credits	-$4,000	Repairs you agree to cover after inspection or to sweeten the deal
Remaining mortgage payoff	-$87,000	Your current loan balance, including any prepayment fees
Estimated net proceeds	= $273,000	What you actually walk away with

If your net proceeds won’t be enough to cover your next steps (making a down payment on your next home, building retirement savings, or reaching other financial goals), you need to know before you list.

It’s important to know when selling your home to get out of debt makes sense—and when it doesn’t.

It might not seem like that big of a deal to undersell a $400,000 home for $390,000—until you consider what $10,000 in net proceeds means for you. Check this out:

Seller Scenario	What $10,000 More in Net Proceeds Does
Upsizing to a larger home	Covers an additional 5% of a $200,000 down payment
Building your emergency fund	Could fully fund a 3–6-month emergency fund
Heading into retirement	Could grow to more than $30,000 in 10 years if invested at 12%

To help decide next steps for your net proceeds, see where you’re at on Ramsey’s 7 Baby Steps.

3. Set your pricing strategy.

The CMA gives you a price range. Your pricing strategy determines where within (or outside) that range you list. Let local market data drive your decision, not your gut. There are three approaches:

Pricing Strategy	Net-Proceeds Impact
Above market: List higher than comps to test the sales price ceiling	Lowers net proceeds after price reductions
At market: List within the comp range to attract serious buyers at full price	Maximizes net proceeds with competitive offers
Below market: List below comps to attract multiple offers quickly	Risks lower net proceeds unless demand is high

For most sellers in most markets, at-market pricing is the right call. It attracts buyer interest without leaving money on the table and lowers the risk of price cuts.

Days on market is your best signal for where to price within your comp range. If homes in your neighborhood are going under contract quickly, you’re in a competitive market—price at the top of your comp range. If homes are sitting for weeks without offers, price at the midpoint or slightly below to generate more activity.

 

No sellers want to lower their price. It feels like admitting the home isn’t worth what you thought—or worse, like giving money away. Some sellers would rather pull the listing than drop a dollar. But a price reduction isn’t a defeat. It’s a correction. And making it at the right time, based on real market signals, protects more of your net proceeds than waiting too long ever will.

If you’re not sure whether it’s time to lower your price, look for these signs:

• Minimal showings in the first two weeks
• No offers after three to four weeks on the market
• Consistent feedback that your price is too high
• Comparable homes going under contract while yours sits

A single well-timed price reduction beats a series of small cuts that encourage buyers to wait for the next price drop.

Frequently Asked Questions