Why pricing your house correctly is crucial
July 18, 2008 by Monika McGillicuddy
Filed under Blog, NH Real Estate
It is not easy trying to comp out a house in this market. The market is fluid and ever changing so pricing is crucially important.
When preparing a Comparative Market Analysis, CMA, recently I was trying real hard to come up with a good realistic listing price and it was not easy!
I had to put more weight on the “on markets” than the “sold” comps.
Traditionally real estate agents are taught to put more weight on the “solds” when trying to establish a property value.
After all, the “solds” tell us an important story. They tell us what a property actually sold for!
Not the pie in sky hopes that the listed price usually indicates but what a buyer actually paid. Very important data for sure. And in the old days that piece of data was the most important piece.
Not anymore…
When agents prepares a CMA they usually select homes that are comparable to the subject and they rate the homes they selected.
A typical rating system is much like this;
1. Equal (=)
2. Inferior (-)
3. Superior (+)
If there are comparable homes on the market that are priced at 399,900 (-), 389,900 (+) and 384,900 (+) and they have been on the market 129, 95 and 80 days respectively.
Would it make sense to price your home higher or the same as ones that have not sold especially if they are superior or equal to your home? If you were a buyer and looked at nearly identical homes in a similar neighborhood and setting…which would you buy?
Now understand that the average sold prices indicate a value of 409,000 to 419,000…but nothing has sold in the last 4-6 months. The sold data is very old in terms of market movement.
It is very important to make sure your agent has analyzed the whole market. The Days on Market are very important.
If the average days on market “DOM” is 118 days…should a seller be panicking 60 days out without an offer? Depends on the seller and their needs.
Some questions to consider…How quick do you need to move? What is more important money or time?
Do you really need to sell? If not perhaps it would be better to wait the market out and list your home at another time.
Here in lies the dilemma.
Do you test the waters, list on the high end, play catch up and run the risk of stigmatizing your property?
Do you list below your best competition and hope your home sells first?
Do you list at a fair market price and do everything possible to make your home shine?
Only you can answer those questions. Make sure the agent you are working with understands the market and is realistic…you don’t need an unrealistic overly optimistic agent. You need sound market advice and an honest experienced REALTOR.
Pricing to sell is a must in New Hampshire.
Read everything you can, there are a lot of good New Hampshire real estate blogs full of excellent information available. Education and a good agent is the key to market success.
Read also:
Multiple Offers -A Bird in the hand
Don�t stigmatize your home by over pricing!
Pricing homes is hard these days. With not many home sales, you have to look at the active market. Price your home right when you first list, and you’ll end up getting more than if you list high with intentions of lowering it.
Good post, very valid points. The pricing of the house can make all the difference, even if it is going to be negotiated later. I have had some potential buyers express their disinterest in homes that are priced too high initially because they feel that the seller is going to be a pain to deal with. Likewise with a price that is too low, because they think that there must be something wrong with the house or the neighborhood.
With all the fluctuations and constantly changing values, it is very hard to determine that. I have seen a big price differences of everything within one past year and it is ridiculously changing with no perceptions and predictions. Thanks for your post.
Our basic pricing structure and our pricing systems are really weird and we can’t go with all that fluctuation without any advanced strategies. I am not in the favor to go with overpricing or underpricing but I prefer to analyze anything in true manners.
I like accuracy and perfection without anything fancy and beyond my imagination. I am kind of realistic person who always accept the reality.