How to price a house in this crazy market. (RE agent, square foot, appraisal)
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We live in a development with custom homes on approx. 1/2 to 1.5 acre lots outside of Charleston, SC. New built homes do not hit the MLS, so do not bake into the comps. So recently homes have been built between $750K to $1M.
Houses in our development sold for: $129/sq ft in 2009 (this included one bad foreclosure at $94/sq ft - so brought down the average considerably - remainder homes were $115-$149 per sq ft). $133/sq ft in 2008; $150/sq ft in 2007; $139 in 2006. Our development was started in 1990 - so prices are all over - but these are the most recent. Sales over $500K are not that common in our area, but RE agent comps show our home at $132/sq ft in recent sales.
This year: We have approx 10 houses on the market - including ours. We have three distressed sales - all foreclosure or pre-foreclosure. ONE very undesirable, bad location, house is a raised home, backs to trashed house cluttered with junk on a main road - so wasted space in basement, and is $83/sq ft. Remainder of homes (even foreclosed homes) range from $131 to $172 per square foot.
We've priced our house - at what we feel is aggressive $130 per square foot. We've been told by EVERYONE that our house is by far above everything in even the over $600K range - even the caravan of realtors all gave us 5 out of 5. Out of 4 showings have rec'd 2 offers - one even a real estate broker - so even the pickiest. We've only been on the market a few weeks.
Here is the problem, because we've priced it so aggressively - the buyer still wants to feel they're getting it below asking - so are coming in at 92% of asking... which I understand. Even though, they themselves have raved about the house - comparing to $750K houses... Our direct comp in the neighborhood is at $630K, we've priced ours at $575K.
Should we be pricing it as the neighbors - between $145-175 per square foot, and risk not having the showings, just to give us more room to bargain? I feel we're being penalized for pricing it aggressively in this market, as the buyer still wants to feel they're getting "a deal." Rather than accepting that we priced it aggressively, and realizing we're almost at rock bottom at the price. We've countered both times at $550K which is $125/sq foot - below the comp of $132/sq foot for recent sales. One buyer wasn't qualified, so actually couldn't buy even if he wanted. Second buyer is the real estate broker and is using the distressed sale to try to justify selling at $530K. We feel we're not gouging at $550K - it is at $125 sq foot - house was built in 2008 at $148 sq ft. You name it our house has it - custom woodwork (even closet organizers), Oil rubbed bronze Moen even on toilets, granite, hardwood floors, marble/tile shower, 7 shower heads in oversize shower, jetted tub, tv mounts every room, surround sound, 3 car garage, over 600 sq ft in porches - even screened in, central vac, granite, top of the line stainless steel appliaces, tankless water heater.... you get the idea.
What are your thoughts... our agent feels pricing it higher will deter showings, but it seems these buyers are looking up to $750K anyway. House has appraised close to $600K, last year - so shouldn't be a problem getting an appraisal - and that was prior to our upgrades.
If your house is correctly priced, or even slightly below market value, your agent should be letting you know. He/she should be able to provide those comps to the agents representing your buyers. Increasing your price, even only a couple dollars a sq. ft. could deter viewings. How long have you been on the market? If you mentioned it above, I missed it. The important thing is to not chase the market down, if the market values are declining in your area.
I say stick to your guns with your $550 counter and if the deal crashes I would set my listing price at 131 - 132. I think by pricing competitively you achieved your goal of getting offers. There's no reason to take major concessions in the negotiating phase.
We knew we were moving in June - so our agent brought the first couple thru prior to it listing - that was the first offer, which dragged out for over a month (long story). After finding out they couldn't get financing, we then waited til our daughter went off to college to list the house - so it only hit the MLS the beginning of Sept. 2010. Since hitting the MLS we've only had 3 showings, and the RE office caravan (which one of the agents wanted to buy it too... LOL).
The market here has not been affected like it was in Michigan, or even what we're seeing in Arizona (where we're relocating too). Houses under $200K are selling here. BUT this is not an affluent area - so few buyers in our price range. According to our RE agent - last year only 6 homes sold in over $500K range - and 2 were new build. So buyers are few and far between in this price range.
RJ,
If the buyer moved from $530 up to, let's say, $535 already, and you say your last counter was $550, the question you should be asking yourself is do you REALLY want to keep fooling with this thing over $15,000? Why not buy a nearly new used car next time you're in the market for a car and make up the diff that way? You are still stuck in the numbers racket and figuring and comparing and saying, "Gee whiz," when one signature stands between you and a sale. I do NOT think the offer was terribly unreasonable, altho I should think that realtor might have met your $550 counter. But he is good at this and he's gonna play hardball, and true, your house is already cheap for a quicker sale, but it don't matter, becuz buyers look at that price and will want to take off for this reason and that reason. Get that buyer back on board and sell it for what the heck he last offered.
GG
Next move, don't buy a house in the top 10% of the market if you are in a community that doesn't attract high end buyers. Just rent an expensive house or get one more middle range.
I really do not believe in becoming overly focused on a cost per sq ft. It is all but impossible to price out every last little thing that contributes to a specific cost per sq ft -- upgraded fixtures, trim, finishes all are part of the cost per sq ft, but the "soft values" that come from an attractive site, efficient lay out, good color choices all add to make a home appealing too.
The OP seems to understand that it is impossible to ask for a counter above one's list in this market, but they are still stuck / lamenting the fact that they had to list lower than they wanted to. Is the solution to reject an offer that is 92% of ask? Is ther a good likelihood that something will soon change are prices will start climbing? My gut says NO...
If you want / need to sell it is wise to work with early offers and ultimately ACCEPT them in most cases.
Any appraisal will not help you predict future prices, nor will it do a seller much good even if the buyer / lender appraisals are out of whack.
RJ,
If the buyer moved from $530 up to, let's say, $535 already, and you say your last counter was $550, the question you should be asking yourself is do you REALLY want to keep fooling with this thing over $15,000? Why not buy a nearly new used car next time you're in the market for a car and make up the diff that way? You are still stuck in the numbers racket and figuring and comparing and saying, "Gee whiz," when one signature stands between you and a sale. I do NOT think the offer was terribly unreasonable, altho I should think that realtor might have met your $550 counter. But he is good at this and he's gonna play hardball, and true, your house is already cheap for a quicker sale, but it don't matter, becuz buyers look at that price and will want to take off for this reason and that reason. Get that buyer back on board and sell it for what the heck he last offered.
GG
Buyer's original offer was $515K, we countered and they came back at $530K, and are staying at $530K. We're at a $20K difference. FYI - we drive used cars a 2004 and 2005 - so don't need the lecture there.
Next move, don't buy a house in the top 10% of the market if you are in a community that doesn't attract high end buyers. Just rent an expensive house or get one more middle range.
We purchased this home as an investment - to try to recoup our losses we incurred in MI - not only did we lose all equity, but had to take $50K to closing. This was a foreclosure, we planned on being here for 10 yrs at least - but shortly after purchasing the house - my husband lost his job. So now we're trying to break even.
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