After shaking my hand and showing me their home, the likeable and friendly retired couple asked me to have a seat at their kitchen table so we could get to the business of hearing my marketing strategies for selling their home. Before I began, Mr. “Smith” excused himself, showing up moments later with a large file that landed with a thud on the kitchen table.
Inside were receipts for every repair and improvement the Smiths had made, dating back to 1986. Mr. Smith had taken the time to tally up the extensive list, added in what they had originally paid for the home, and, beaming with pride, announced that the total sum was the sales price he and his bride expected to achieve.
It Doesn’t Work That Way.
I watched the twinkle go out of his eyes when I told him that wasn’t the way it worked.
What IS Right Pricing?
My definition of right pricing is finding the highest and best listing price possible for my Seller clients, while keeping the potential buyers excited about seeing it and ultimately making an offer on it. It is as much art as it is science to find that magic number. And a little bit of “gut”: knowing from experience what today’s buyer is likely to offer for your home.
Here are some basic tips for pricing your home right in the first place (And pricing it right – straight out of the gate – is your best shot to get your highest and best achievable offer. This is true no matter which way the real estate winds are blowing.)
1. Take Emotion Out Of It.
Yes, this is your home, whether you’ve been there a year or 40 years. But now you need to push aside those precious memories of family time spent together and begin to look at your home as a product you are selling. You also need to come to grips with the hard fact that buyers simply don’t care how much you paid for the home, how much you need to net, how much you spent on improvements, etc. They will only pay what they think it is worth in the current market.
2. Get Two or Three CMA’s.
Call on Top Producing Realtors in your area to come out and give you a realistic selling price for your home. Ask them for a comparative market analysis (CMA) which shows the prices of comparable properties that are actively on the market, sale pending, and recently sold, as well as homes that failed to sell. The homes actively on the market are your competition, so you will want to see multiple photos of each of these homes to see how they stack up to your home. Of course the homes that SOLD paint the best picture, and you will see what the buyers paid for the home in comparison to what each home was listed for, as well as how long each home was on the market before achieving a sale. And as the agents show you the homes that failed to sell, you’ll see that in the overwhelming majority of cases, the homes were simply listed too high.
Keep this important fact in mind: If two Realtors come in with similar opinions on price, and a third Realtor comes in much higher price, he or she may be just trying to “win the listing”. Don’t just go with the highest bidder. Make sure each Realtor is showing you the very best “apples-to-apples” comparables available and the evidence will speak for itself. If you list your home too high, especially in a buyer’s market, you will end up lowering the price anyway, and by that time your has become “shop worn” and you will likely have lost your window of opportunity to achieve your highest and best offer.
3. Don’t Rely On A Recent Appraisal.
With a market as upside-down and unpredictable as today’s housing maket, the appraisal you may have paid good money for just six months ago may not reflect current reality at all. Even in a Seller’s market, appraisals tend to reflect “perfect world” conditions. They don’t really factor in such things as where a home is located inside a subdivision, freeway noise, lot layout, etc. A well prepared CMA is a better reflection of value. (Appraisals certainly have an important place in our industry. Once you get an accepted offer, the buyer’s lender will order an appraisal to ensure that the value of your home meets or exceeds the contract price.)
4. Do Some Homework On Your Own.Go to Open Houses in your neighborhood that best compare to yours, especially those with a similar floor plan. How do these homes compare to yours in terms of size, condition, location in the subdivision, lot size, updates/upgrades, etc. If your home was on the market at the same price, which home would you buy?
5. Be Competitive!
After interviewing Realtors and doing some of your own research, you now have a good idea of value. Dress your home for success, inside and out, price your home just under your fiercest competitor, and you will be positioning yourself well to win over that buyer and get that sales contract.
I would love to hear from you. Feel free to leave a comment below, or call me any time at (502) 643.7653 if I can help you or anyone you know who is interested in getting a CMA of their Louisville home. The Shafer Team also specializes in Oldham, Henry, Shelby and Trimble counties in KY.