The Pricing Dilemma
Do NOT Overprice Your Home
You don't want to overprice the home because you're going to lose the freshness of the home's appeal after the first two to three weeks of showings. Demand and interest wane after 21 days or so. Of course, there's nothing stopping you from dropping your price later, but this can be a matter of too-little-too-late.
On the other hand, don't worry about pricing it too low because homes priced below market value will often receive multiple offers. This will then drive the price up to the market. Pricing is all about supply and demand. It's part art and part science.
Pull Comparable Listings and Sales
Look at every similar home that's been listed in the same neighborhood as your property over the last three months. Appraisers don't use comps that are older than three months.
The list should be limited to homes within a 1/4 mile to a 1/2 mile radius unless there are only a handful of comps in the general vicinity of the property is rural.
Pay attention to neighborhood dividing lines and physical barriers such as major streets, freeways, or railroads. Don't compare inventory from the "other side of the tracks." Identical homes directly across the street from each other can vary by as much as
$100,000 in some neighborhoods. Perceptions and desirability have value. Compare similar square footage within a 10% variance up or down if possible.
Compare similar ages. One neighborhood might consist of homes built in the 1950s right next to another ring of construction from the 1980s. Values between the two will differ. Make sure you're comparing apples to apples.
Honestly, assess desirability. If you're fortunate enough to own a dream home that will cause buyers to faint upon entering, you might be able to get away with tacking on a premium.
Check out the Sold Comps
Now compare original list prices to final sales prices to determine price reductions. Compare the final list prices to actual sold prices to determine ratios. It's common for homes to sell for more than 100% of list price in a seller's market. Homes generally sell for list price or less in a buyer's market.
Adjust pricing for lot size variances, configuration, and amenities or upgrades.
Withdrawn and Expired Listings
Pull the history for any expired and withdrawn listings to determine whether any of them were taken off the market and relisted. If so, add those days on market back to these listing time periods to arrive at an actual number of days on the market.
Look for patterns as to why these homes didn't sell and note any common factors they might share. Which brokerage had the listing? Was it a company that ordinarily sells everything it lists or was it a discount brokerage that might not have spent sufficient money on marketing the home?
Think about the steps you can take to prevent your home from becoming an expired listing based on this information.
The ultimate sales prices of these homes are unknown until the transactions close, but that doesn't stop you from calling the listing agents and asking them to tell you how much the property is selling for. Some agents will. Some won't.
Again, make a note of the days on the market. This can have a direct bearing on how long it will take before you see an offer. Examine the history of these listings to determine price reductions.
Bear in mind that sellers can ask whatever they want. That doesn't mean they'll get that price. Tour these active-listing homes so you can see what buyers will see when they visit. Make note of what you like and dislike and the general feeling you got upon entering the homes. Recreate the positive feelings of reception in your own home if possible.
These properties are your competition. Ask yourself why a buyer would prefer your home over any of these others and adjust your price accordingly.
Square Foot Cost Comparisons
The buyer's lender will order an appraisal after you receive an offer so you'll want to compare homes with similar square footage to come as close to the eventual appraised value as possible.
Appraisers don't like to deviate more 25% and they prefer to stay within 10% of net square footage computations. If your home is 2,000 square feet, comparable homes are those that are 1,800 to 2,200 square feet.
Average square foot cost doesn't mean you can simply multiply your square footage by that number, at least not unless your home is average-sized. The price per square
foot rises as the size decreases and it decreases as the size increases. Larger homes have a smaller square foot cost and smaller homes have a larger square foot cost.
The reason why you should not overprice a home is simple. It won’t sell! In addition to not selling when you overprice your property the odds are stacked against you that it will sell for what it should if priced properly from day one!
The process of selling a home can be an emotional roller coaster, one that many people are not adequately prepared for. What your home means to you, and what you imagine it to be, must come to terms with the real world of the current real estate market.
Nowhere does this clash become more apparent than in pricing your home.
You are putting your home on the market to sell it. This may seem like a given, but you would be surprised how many people miss this important fact when they begin working on listing their home.
Everything you do in the listing and selling process is meant to accomplish this goal. It may be one of your most prized possessions, but the price the market will bear is the most important factor in the sale of your home.
As you try and Sell Your Home on your Own contact me with any questions. I will give A FREE Comparative Report to help you.
CALL Ken at 888-519-2334
PS. Do NOT miss the Property Marketing Plan I use to attract buyers and sell homes for well above the competitotrs average performance. And
feel free to share it with anyone you know personally thinking of moving.