Pricing 'In the Market' . . .
What is Your Home Worth?
My goal is your goal . . . to obtain the best possible price for your home and to do it
within as short a listing period as possible. AND, to do it with the least amount of hassle
and inconvenience to you.
In working toward this end, there are some factors that affect the sale of a home
that are within our control and some that are not. For instance, fixed unchangeable
factors will include the general economy, the physical location of your home, the
existence of any undesirable issues such as nearby power lines, etc. Factors that
can be controlled, to varying degrees, are the condition of your home, the target
marketing plan AND your pricing strategy.
Real estate agents estimate the Current Market Value of a home by researching and
compiling Sold properites that are 'comparable' to your home. The data is put in the
format of a CMA, or Comparative Market Analysis. The purpose of this analysis is to
give you a price range, or an estimated 'market value.' But, in addition to this
analysis, there are a number of studies that can and should be reviewed in devising
your Pricing Strategy.
1. A study of current market conditions in the Atlanta area including any
ascertainable trends. One gets the bird's eye view of the national housing market
from the national news, Case Shiller, the NAR, etc. But the market varies greatly
from city to city as well as communities within a particular urban area. In addition
to publicly available market information for the Atlanta area, I have access to
analyses of listing and sales data compiled by an independent consultant exclusively
for certain Keller Williams Realty brokerages. This information lays out rates for
specific areas out relevant data as days on market, price reductions, sales/list
price ratios and absorption.
2. A study of comparable Active listings. These are your competition. I preview
these properties so that I know first-hand how they compare to your home. I will
often recommend that Sellers also visit these properties. I continue to keep a close
watch on these listings watching for any price reductions, status changes or new
upgrades during your listing period. This is important in keeping your listing
competitive and not inadvertently pricing to sell your neighbor's house instead of
yours!
3. The current inventory, i.e., the actual number of current listings. This tells us
how many homes Buyers have to choose from, supply and demand. Is is a Buyers'
Market or a Sellers'.Market and how does that affect pricing? Homes, with few
exceptions, sell at Market Value. Basically, Market Value is the price that a Buyer
is willing to pay for your home and you are willing to accept. It is estimated by
taking recently sold properties similar to your home generally with respect to location,
size, features, major upgrades or renovations and the condition of the home. These
properties tell us what Buyers have been willing to pay. Market Value is not
influenced by what you paid for your home when you purchased it. Nor is it
calculated with how much you have invested in your home in mind, though updates
can certainly increase its value. It is not what you need to get nor what it would
cost to rebuild the house. It is independent of these subjective factors.
4. A study of comparable listings pending sale. This group of properties tell us
what list prices have successfully solicited an Offer from a Buyer.
5. A study of Expired and Withdrawn listings. These tell us what list prices may
have been unsuccessful in soliciting a successful Offer. (While there may be other
reasons a home doesn't sell, as the condition of the home, over-pricing is very often
a factor.) In some rare instances, I may recommend that a Seller consider hiring a
licensed appraiser to give a Market Value estimate. If a home is very unique or,
perhaps, outstanding in size and/or features compared to the other homes in the
neighborhood, an appraiser will take in many factors and calculate an estimated
market value range.
Initially, pricing your home as accurately as possible for the current market is critical
to selling it within a reasonable time. A home that is over-priced for current market
conditions will not compare favorably with its competition and will sit too long,
becoming “stale.” Eventually, Buyers begin to think that there is either something
wrong with the property or that the Seller is not serious about selling. Subsequent
price reductions tend to erode a Seller’s bargaining power. Many times, the Seller
in these cases end up with less what they would have received if the initial asking
price had been more accurate.
Often a Seller is not in a hurry to sell and wants to ‘test’ the market with a higher
than Market Value list price. The unfortunate thing about this approach is statistics
show that the largest single pool of potential Buyers will see your home within the
first three weeks of listing it. These Buyers are also the most knowledgeable
about the market as they have been looking for some time and have seen comparable
listings. After this first flush of showings diminishes, they tend to drop down to just
new Buyers as they come into the market and who may want to see what else is
available before they make commit to making an Offer.
Pricing can be a sensitive issue, and I never want a Seller to think that he/she could
have gotten more for their home. It is your money and your decision, and I encourage
you to talk frankly and ask any questions you may have. But if you want to sell within
a reasonable time, considerable thought should be given to the factors that have
proven many times to be the difference in getting the most money early in the listing
period rather than less money after many months on the market.
"Home is where one starts from." T.S. Eliot
