Pricing: It’s All About the Comps
The most common mistake we see with home sellers is not pricing their homes correctly. This mistake can cause one of two catastrophic outcomes:
1) Pricing your home too low and leaving money on the table OR 2) Pricing your home too high and watching it sit on the market with no real interest.
Properly analyzing the comps (comparable properties in your market) is the best way to determine your price. Remember, the greatest focus with comps should always be on SOLD listings because active or pending properties could sell for a lower value and skew the numbers.
Here are a few tips to avoid a pricing disaster:
1) Remember to look at your property, not just your house.
If you are on a lot that faces challenges (located right next to a busy street) as compared to others in the neighborhood with very desirable lot locations (cul-de-sac, large corner lot, park adjacent) you need to be very careful if you are using them as comps.
Helpful Tip: try to find other properties with similar challenges to yours and analyze them. If they are not comparable to your home, compare them to other similar homes and determine what percentage of the price had to be discounted to overcome that challenge.
2) Try to stay in your neighborhood.
Many sellers will reach out too far to find a property that will justify their price. Buyers are not doing that. They are comparing your home or property to others in the neighborhood. No buyer will take you seriously if you are picking and choosing your comps from different neighborhoods miles away.
Helpful Tip: If there are no comps in your neighborhood and you do have to venture out, remember to find a neighborhood offering truly similar homes. Year built, style and finishes are all important when analyzing the comps; the homes you are using should remind you of yours.
3) Number of stories is very important:
If your house is a two story, you should be looking at other two stories if at all possible. One story homes tend to have a larger buyers pool and different stats as compared to two stories in your neighborhood. If you are looking at both, you may be skewing your own numbers.
Helpful Tip: Bedrooms location is also very important, specifically the location of the master bedroom. A two story with the master on the main level is historically a more desirable layout for buyers. So if your master is upstairs, try to look at others with the same layout for a truly accurate picture.
4) Pay attention to the finishes:
If your home is not updated or remodeled, make sure you are looking at other homes with similar finishes. Updated or “turn key” homes have different stats than homes that are more dated. Also, if you are using comps with different levels of finishes, you have to make a guess on what the differences in value would be, which is very challenging and subjective.
Helpful Tip: If you renovated your house a decade ago, calling your home “updated” may be a stretch and it won’t be comparable to newly renovated listings.
5) Don’t look at your home through a lens.
Put yourself in the mind of the buyer and always be thinking about what they are looking at. Don’t “reach” and try to see what you want to see. Look at the facts and the hard data and make a practical decision based on the facts.
Helpful Tip: If you are clearly unrealistic with your home’s value, a buyer will not take you seriously and they may not even make you an offer because they don’t feel like you will be a realistic seller. So be practical and you will gain credibility.
Pricing your home can be very challenging, but utilizing these 5 steps will help you employ the same trusted methods as real estate professionals and appraisers. This will lead to a quicker sale, with more qualified buyers, commanding the best price possible.
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