It’s sometimes unsettling to have someone tell you what your most valuable asset is worth. So, obviously, it’s important to educate yourself on how Realtors price your home, and how to avoid the Realtors who are trying to “buy the listing”. Buying the listing is when a Realtor gives you an above-market value assessment in an effort to beat out competing agents for your business. It’s important to find a Realtor who will price your home fairly. Pricing your home too high is counterproductive, and will actually lead to a lower sales price.
When you ask us what your home is worth, we produce a current market analysis (a CMA). The CMA will contain the most recent sales in your neighborhood, along with adjustments for upgrades and deficiencies each house has compared to your home. A complete CMA will have an average list price, an average sale price, as well as the average days on the market before sale.
What are deceptive pricing practices?
Deceptive practices when preparing a CMA include over compensating on adjustments for upgrades, and excluding homes that sold low. Transparency is key in a relationship between seller and agent, so we show our clients all the comparable homes that have sold, and we do not over-adjust prices to “buy the listing”. For us, it’s more important to get you the best sale’s experience possible, and to do that, you need to know what your home is actually worth.
How exactly do you compensate for lack of comparable homes?
Since we have such low turnover (amount of homes that come up for sale), as well as a rapidly increasing (and sometimes decreasing) market, it’s difficult to find comparable homes that have recently sold. To compensate for a lack of comparable properties, sometimes we will pull up sales from 3-6 months ago, and use the benchmark price increase/decrease in your neighborhood to adjust the the sales to today’s market prices.
how do we pick a list price to eventually sell at the actual worth of your home?
Market value and marketing price are two different elements to the sale. In our CMA, we discuss the average listing price, and the average sale price. This is very important, because it gives us a strong indication of where to price the home if we want to land up at our ideal sales price.
For example: Homes in Joshua Creek are selling at an average of 106% of the list price, or marketing price. That means, if your home is worth $1,000,000, in theory we would price it at $945,000 to acheive $1,000,000.
There are also a few unsaid rules about pricing a home so that it finds the right buyers. Because of the way the price filters work online, homes that are priced at $651,000 will get fewer viewings than homes priced at $649,900.
We also try to avoid peculiar numbers like $456,789.00 because it draws attention to itself for no good reason. We want your home to shine because of its images, and write up, not the strange asking price. It’s also important to consider some cultures consider certain numbers are bad luck, like the number 4.
Why pricing a home above what it's worth can eventually lead to a lower sale price
Before overpricing your home, consider a buyer’s perspective. When they first start their home-hunt, they don’t quite understand market value. But, as time goes on, they start to understand the value of homes in the neighborhoods they are searching in. They know if a home is overpriced by 10%, and they will subsequently not view it. If your home doesn’t sell, and you have to reduce the price, then your home will carry a stigma. Often, when homes are priced high and then reduced, buyers will try low-ball the sellers because they perceive them as being desperate to sell.
The way to achieve the highest sales price, is by timing the market, listing at market value, and presenting the home with professional photography and videography.
