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Tips to price home correctly to sell, priced within 5-7 percent of active comps, best condition best price, research active listings, visit neighborhood comps in person
Great advice. We did just that. The problem we're running into is that almost every house coming onto the market is being substantially underpriced. We originally listed at $500 under comps. People are now listing at all different prices, some as much as $50k under. It's been frustrating to say the least.
If they are substantially under-priced, they'll get multiple offers and bidding wars which will drive the prices back up to where it should be. If that doesn't happen, they aren't underpriced. Watch closely.
That is a big question, and subject to many answers. Below is my take on the Right Price.
If your home has not sold in 30 days then you need to do another market analysis and price reduction. However, first you need to determine what that price reduction should be.
If your home is just being listed, then here are some ideas on how to Price it Right the first time. It is much better to Price it Right the first time so the home can be sold during the first 30 days rather than chasing the market down and ending up selling it at an even lower price 6 months later.
It may not be sufficient to only consider listings that have Sold a few months ago. You need to carefully look at the Active listings to see if they are priced below those Solds.
Consider the condition of your home, and compare the condition with the other Active listings in your community. Many times, in today's market, you may be competing against short sales and bank owned properties. If there are some in your community, be sure to visit and preview them, so you know the market. Some of the bank properties may be priced lower than yours, but need much work. Some may be priced lower and not need any work. You need to have that information in order to help you determine your Right Price.
Buyers in today's market, where they have a wide selection, are looking for the home in the Best Condition at the Best Price. When they find that home, they don't have to come in and spend any money to fix it up. If they have to fix it up then they will expect to have a heavy discount, usually much more than the actual cost. Consequently, you must consider Condition along with Price in order to arrive at the Right Price.
Buyers tend to want to buy the most house they can with their available funds. So if your home is already in top condition they don't have to spend any money after they move in. Therefore, they can utilize their funds to make a larger down payment and buy that home of their dreams.
Staging and de-cluttering is a given. Don't ignore this important detail just because someone may have said their home sold in a week and it was in total chaos. You don't have the full story. The home must have curb appeal to make the home initially appealing to the buyer, and once inside, the home must appeal to the buyers who cannot see past clutter.
I believe the home must be priced within 5-7% of the most comparable Sales, and lower than the comparable Actives. Ask your agent to take you to preview the closest comps, whether they are vacant or occupied. If it's occupied then you can have your agent invite the owners to preview your home as a quid pro quo. It helps if each agent knows what is available in the area because if they show another home that their client doesn't want, they may recall that your home is one that may fit the needs of their client. So don't worry about the competing Actives previewing your home. It can actually help you to get it sold.
Bill, I'm glad you've finally come around to the darkside and started to advise people to price below comps ahead of the curve!!!
It's a big guessing game. I've known of houses that have sold in less than 24 hrs. And I've known of some that have sat on the market for years. All have been quality homes and reasonable prices (which are inline with the comps). I think it's just a matter of the right buyers being in the right place at the right time.
Our home sold in less than 60 days. We did a slight price reduction after 30 days ($5000) and started getting some showings where previously we got nothing. I think we had 3 showings in one week. The third showing produced an offer. Our bottom dollar never changed. But if we would have known that little difference on the asking price would have given us showings we would have done it a lot sooner.
If they are substantially under-priced, they'll get multiple offers and bidding wars which will drive the prices back up to where it should be. If that doesn't happen, they aren't underpriced. Watch closely.
I understand what you're saying, and that probably will be the case. The house is definitely underpriced. A similar house just sold for $440 and it's not nearly as nice, and on a smaller lot. This new listing should go for $475. It appears to be in perfect condition with a finished basement that the other didn't have. The house that sold for $440 had no curb appeal, and obviously needed work. I'm hoping it sells quickly so I can figure out how to adjust the price of mine, which at the moment, is looking too high.
I think pricing in this market is insane. We did everything mentioned; and got interesting feedback. We have been getting bids WAY under our asking price. Houses in our area are still selling in weeks. Ours is sitting.
I think now I know why. We were negotiating with a couple; finally it ended, we did not except it. The couple told our realtor they thought our house was priced too low. Our bottom line was too close to the asking price. The buyers need to feel like they are getting a deal. Now are we screwed?
I think pricing in this market is insane. We did everything mentioned; and got interesting feedback. We have been getting bids WAY under our asking price. Houses in our area are still selling in weeks. Ours is sitting.
I think now I know why. We were negotiating with a couple; finally it ended, we did not except it. The couple told our realtor they thought our house was priced too low. Our bottom line was too close to the asking price. The buyers need to feel like they are getting a deal. Now are we screwed?
Gee, maybe we should RAISE our price instead of lower it. You're right, the market is nuts. Give us a fair offer, we will give you a fair deal. Should be simple...not so much...
Gee, maybe we should RAISE our price instead of lower it. You're right, the market is nuts. Give us a fair offer, we will give you a fair deal. Should be simple...not so much...
Wish we were looking at all you nice seller's homes that are priced at or below the comps. We have only found sellers that are unwilling to accept a fair market value offer, houses that have been on the market 6 months or more with no price reductions, people selling after buying at the peak in 06 and trying to sell for a profit. I can understand people's desire to get top dollar but it's obviously not working as these houses are still for sale. Oh well, just venting a little frustration.
Wish we were looking at all you nice seller's homes that are priced at or below the comps. We have only found sellers that are unwilling to accept a fair market value offer, houses that have been on the market 6 months or more with no price reductions, people selling after buying at the peak in 06 and trying to sell for a profit. I can understand people's desire to get top dollar but it's obviously not working as these houses are still for sale. Oh well, just venting a little frustration.
The days of making a profit on something you bought a couple years ago is a pipe dream for most folks. We bought in 2005, right now we are priced 25,000 below what we paid, not counting the extra 25,000 we put in for block wall, synthetic grass and the spa. We are smart enough to know we are not going to get what we paid for it. And we still can't get an offer...
Bill, I'm glad you've finally come around to the darkside and started to advise people to price below comps ahead of the curve!!!
It only took you what? 6 months...
Welcome partner!.....
The only change in my position is using the Actives to set the price instead of the Solds (in some markets). And remember that I'm tying Condition into the equation. I didn't discuss Location in that post, but Location also is a strong factor in pricing.
And the reason for my change in pricing strategy is the change that has occurred in the market, where many of the REO's and short sales are being priced lower than the Solds. People need to be aware of that, and really need to study the Active competition.
Many people will still not go into the Active comp houses to study the competition objectively. They will still treat their property-for-sale as their "home" and it will be better than everyone else's in their mind.
I'm still opposed to arbitrarily pricing low, just for the sake of getting the prices down to where some people think they should be. Before telling someone to lower their price, all of the other factors should be examined, such as Location, Condition, Competition, Sold Comps, and area Market Statistics. That's what a good Realtor does for the client.
My argument has been against the crystal ball argument that home prices must be at year xxxx level, with current buyers trying to low ball and get those levels today (whatever they are).
I have maintained, and still maintain, that buyers should be prepared to pay today's current market value, or wait until they reach their desired level (if they ever do). Advising sellers to be at the bottom of the current market level is not a change in my position; it is a pricing strategy to prevent chasing the market down. It's the same advice I've always given my clients, and prospects.
I've also said that sellers should sell at current market value, (not the 2005 value) and if they want those prices, then take the home off the market until the market comes back up to their level.
My advice in this thread is to price within 5% of the the sold comps, and that may be lower or higher, but remain at the low end or below the Active competition. I've never stated a position of pricing higher than that.
I also cling to my position that it takes two to make a market; a willing buyer and a willing seller, both under no stress or or pressing need to sell or buy. If those two cannot come to an agreement on price and terms then there is no market and no sale.
When an owner must sell due to an emergency situation, then there is stress and a sale may need to be made in a distressed situation where the seller is forced to sell at a distressed price. Today, unfortunately, we have many distressed sales.
The days of making a profit on something you bought a couple years ago is a pipe dream for most folks. We bought in 2005, right now we are priced 25,000 below what we paid, not counting the extra 25,000 we put in for block wall, synthetic grass and the spa. We are smart enough to know we are not going to get what we paid for it. And we still can't get an offer...
I feel your pain! We also bought in 2005 and we knew selling meant taking a huge loss (we are in SoCal) but it was a job opportunity we could not pass up and meant moving closer to our families. We had to put in a backyard too, plantation shutters and even hardwood flooring. We are going to rent our home out - so even though we aren't selling we have been showing the home and that is a pain too. I wish you the best - it is so hard to be in this transition phase.
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