Is The Price Right?

Pricing a home correctly has always been the most essential tool to get it sold, but due to our rapidly changing market, it may be more important than ever. The intown Atlanta market has definitely gone up, but by how much? And will it last? And what about those pesky appraisals?

This is one of those times when it’s essential to have an experienced, local Realtor who knows the neighborhood, and can follow the trends – not just in the original pricing, but throughout the term of the listing. It can change rapidly, in either direction.

As we have always done when pricing a home, we look at recent sales to come up with comparables. However, it’s now more important that we look at the most recent ones, going back no more than a few months. What may have been a relevant “comp” a year ago may be totally irrelevant today.

The biggest mistake I see sellers making, especially those trying to sell their home without an agent, is to base their price on what other sellers are asking. It’s a good idea to check them out, as they will be your competition, but you can never price a home based on what other sellers are asking. Let’s face it, a seller can ask anything for their home, but that doesn’t mean they’ll get it.

Once you’ve determined a proper price range for the home, there’s some fine-tuning that comes into play. For instance, if your value range is $440K-$460K, there are several distinct advantages to pricing at $450K. One is based on online searches, which is how virtually all buyers find homes, whether working with an agent or not. If a buyer or agent searches listings up to $450K, and your home is priced at $452K, it’s likely that buyer will never see it.

Another reason to price at or below a significant price point is based on the fact that buyers shop by comparison. Using the example above, let’s say you have your house priced at $455K. It’s very possible that the buyers looking at your home may be able to afford up to $475K or $500K. Your home will more than likely not compare favorably to a home listed at $475K. If however, you were listed at $450K, you will also get buyers who are only looking up TO that price. In that case, your home will compare favorably to homes that they are looking at that are priced at $425K, and they may be willing to stretch to the top of their price range.

The pricing process doesn’t end when the home goes up for sale. It’s imperative to monitor the market and react to any necessary changes. Most importantly, it’s essential to get feedback on the showings your home gets. This is another area where a For Sale By Owner is at a disadvantage. People tend not to give open and honest feedback directly to a homeowner, but agents will tell each other exactly what their clients had to say about the home, and it’s our duty as Realtors to pass that information on to our clients. If we get 10 showings, and 8 of them said that they felt the price was too high, it’s time for a price reduction. These are the actual buyers – and their experienced and educated representatives – that are in the market today, and are shopping by comparison.

It’s also important to continuously monitor the competition, and to follow up on what comparable homes sell for while your home is on the market. This can be very helpful, as it will supply you with the most recent relevant comps for your home. As a Realtor, I keep in contact with the agents who have comparable listings in the area to see what their activity has been like, and if they’ve reduced the price at all. I want my listings to be remain competitive with other active listings. Often, if your home is superior to a competing listing, it makes more sense to price it the same as that home, rather than above it. Let a buyer see the difference of what they can get for the same amount of money.