Pricing the House to Sell, NOT Sit
Trying to figure out the price to list your home is NOT an exact science. If it were, negotiation in real estate transactions would be non-existent and most real estate agents would have far less gray hair. Unlike going into a store to buy a pair of jeans or a gallon of milk, the price listed for a house is rarely the price that a buyer actually pays to own it. Pricing has a science side; but it’s important to be strategic about how to respond to the feedback of “the market;” most especially to respond when the market does not seem to be saying much of anything.
Back to the idea of the three things necessary to sell a house:
- condition (see “Staging”),
- location (see Communities)
The cost of the home is one factor that is seller-controlled, meaning that as a seller, you get to make the decision on what the price is, when it should be changed and ultimately what you will accept in the end. Your real estate guides the process.
When pricing a home, it’s important to look at the “comps” (comparable sales in a certain geographical area around the subject property.) This practice is exactly what an appraiser will do when they come out, after contract acceptance. The idea is to find the property that is MOST SIMILAR that has actually sold within the past 6-12 months, within a ¼ mile radius.* The radius can and will be variable if there are not many homes located close to one another (low density) or if housing variation is high within a neighborhood. Appraisers do pull further back in time and further away geographically if they need to, in order to find a suitable comparable.
When working with sellers, I like to also show the “actives” (which equate to the competition on the market), the “pendings” (under contract but the true value of the property is not yet known) and the “solds” (the success stories, those homes that have a true market value on the books.) If my sellers are struggling with where to price their home, I will offer for us to go out and see some of the active listings and to invite my clients to adopt “buyer’s eyes,” to size up the competition and see where their home falls in the mix.
The first offer received on a home is typically the best offer. This can be hard to digest if the first offer comes in lower than sellers’ expectations. With savvy negotiation, the sharing of true stats, and a willingness to keep the end goal in sight, an offer can be the start of a productive conversation that ends in getting all parties where they want to go, on time.