How to Price Your Home in Any Market
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Here is the background and formula on how to price your home in any market:
1. Make your home the best deal. The best deal doesn't necessarily mean the cheapest. It could mean best value. Remember that the potential buyers of you home are looking for a deal, and when they talk real estate across the back yard fence, they want to prove how savvy they were when they bought your property.
2. Examine the comps and pay attention to the homes that have sat on the market, find out what went wrong with those. Were they overpriced? Were they shabby? Maybe it was really tough for agents to get their clients in to show them.
3. Realize the trade off beween price and time on the market. It doesn't matter if the market is a "Buyers Market" or a "Sellers Market", there is always going to be a trade off between price and the time on the market. Homes priced lower will sell quicker unless there is some charecteristic of the property preventing from selling, like no curb appeal, bad paint, or just simply being in poor condition.
4. Know how to use the price per square foot of the recent sales (comps). Price per square foot is a controversial statistic, because two homes that are identical floorplan, may be in remarkably different condition, therefore price per square foot is less accurate. Likewise things such as landscaping, pool, view, all will offset the price per square foot. Think of it this way, price per square foot gets you in the ballpark; it is still up to you and your agent to find the correct seats and order the hot dogs and cotton candy.
5. Build in the ready expectation to flex. If you price the property at the bare bones price to begin with, realize that people are still going to want to negotiate with you. Look at the listed price vs actual sales price of the recent comps in the area. This will indicate how much the most recent sellers have flexed in their negotiation. You will want to build a similar amount of flex into your price.
6. Use sites like Zillow with caution. I like and appreciate what Zillow does, but at the same time, realize that an automated system for finding home values will not provide you with the necessary information that you can get from a Real Estate Agent who has put their "feet on the ground" of the neighborhood. Real Estate Agents know the ins and outs of the human emotion and decision making of why this or that deal did or did not happen. This is where an automated system isn't going to provide you the necessary depth on a very important point. Again, it gets you to the ball park that's ok, but sooner or later you'll need to sit down and watch the ball game.
Here is the background and formula on how to price your home in any market:
1. Make your home the best deal. The best deal doesn't necessarily mean the cheapest. It could mean best value. Remember that the potential buyers of you home are looking for a deal, and when they talk real estate across the back yard fence, they want to prove how savvy they were when they bought your property.
2. Examine the comps and pay attention to the homes that have sat on the market, find out what went wrong with those. Were they overpriced? Were they shabby? Maybe it was really tough for agents to get their clients in to show them.
3. Realize the trade off beween price and time on the market. It doesn't matter if the market is a "Buyers Market" or a "Sellers Market", there is always going to be a trade off between price and the time on the market. Homes priced lower will sell quicker unless there is some charecteristic of the property preventing from selling, like no curb appeal, bad paint, or just simply being in poor condition.
4. Know how to use the price per square foot of the recent sales (comps). Price per square foot is a controversial statistic, because two homes that are identical floorplan, may be in remarkably different condition, therefore price per square foot is less accurate. Likewise things such as landscaping, pool, view, all will offset the price per square foot. Think of it this way, price per square foot gets you in the ballpark; it is still up to you and your agent to find the correct seats and order the hot dogs and cotton candy.
5. Build in the ready expectation to flex. If you price the property at the bare bones price to begin with, realize that people are still going to want to negotiate with you. Look at the listed price vs actual sales price of the recent comps in the area. This will indicate how much the most recent sellers have flexed in their negotiation. You will want to build a similar amount of flex into your price.
6. Use sites like Zillow with caution. I like and appreciate what Zillow does, but at the same time, realize that an automated system for finding home values will not provide you with the necessary information that you can get from a Real Estate Agent who has put their "feet on the ground" of the neighborhood. Real Estate Agents know the ins and outs of the human emotion and decision making of why this or that deal did or did not happen. This is where an automated system isn't going to provide you the necessary depth on a very important point. Again, it gets you to the ball park that's ok, but sooner or later you'll need to sit down and watch the ball game.
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Rory,
Great advice, and in regards to tip #6, you really do have to be careful with those services (and it's a pain to explain to people why their home is above or below that value). I typically will look at multiple online valuation sites to get a pretty good feel, and then I'll go through the real work. Just as a little tip I use a site called www.HouseFront.com instead/along with zillow (I like their site/information better, a little less cluttered than zillows) but thats just my opinion. Great post!
Posted by
Dennis |
9:04 AM