Price is Critical !
Pricing a home in a changing market
By Joseph Pluscht Jr.
Today, pricing has never been more critical — or difficult. Some sellers refuse to accept that prices have leveled off; others are confused about the changing market conditions.
Price vs. Value
First, you have to understand the difference between price and value. Two homes might have identical prices and similar specifications, but there are a number of factors — location, upgrades, and condition, for example — that could make one home a better value than the other.
Compare the specific features (such as the number of bedrooms and baths) and the square footage of listings and take into account whether the kitchens and baths have recently been updated, a roof has been installed in the past year, or the property has been attractively landscaped.
Evaluate the homes’ locations within a particular community. Does the backyard view woods or another home? Is the home on a corner lot or in the middle of the block?
An Appealing Price Point
Second, you want to find a price point that will generate interest among multiple buyers. By attracting more than one interested party, you create a greater sense of urgency and competition.
Buyers often search for properties within certain price groupings, such as $480,000 to $500,000. If a reduction is necessary, the listing agent could drop the price to $479,000, the top end of the next price grouping, thus exposing the listing to a new crop of buyers who might otherwise not have found it.
Motivation. Are you serious about selling your home or just testing the waters? Do you need to sell fast because you are relocating or have signed a contract on another house? Or are you willing to wait for the highest possible offer to maximize the equity they receive?
Realistic expectations. Recent changes in the market, such as rates of appreciation and average days on the market. An understanding of current market conditions, creates less stress, confusion, and anxiety for everybody.
Reprice, early and often
Market conditions, such as average days on the market and the level of activity on homes similar to your listing — the number of showings and whether any offers have been made — will help you determine whether it’s time to adjust the price.
Don’t let a listing languish at the wrong price. Your best chance for a full-price offer comes in the first three weeks. If, as sometimes happens, there’s just no activity on your listing, consider a price reduction, or a series of timed reductions, to generate interest and excitement.
Real estate salespeople don’t dictate price; the market does.