Preparing a proper market analysis is more crucial than ever. Not only do we need to worry about over pricing but under pricing as well. No one wants a home to just sit on the market and become stale or become stigmatized. All the more reason to clearly understand the guidelines behind pricing. Underpricing a home without the sellers informed consent just so it won’t sit on the market is a violation of Article 1 of the REALTOR Code of Ethics. Make sure your client clearly understands where the market is at and where their home should be priced at.
How did you come up with that price…anyway?
When preparing a Comparative Market Analysis, CMA, recently I was trying to determine a good listing price. It’s not an easy job!
I had to put more weight on the “on markets” than the “sold” comps.
Traditionally real estate agents are taught to put more weight on the “solds” when trying to establish a property value.
After all, the “solds” tell us an important story. They tell us what a property actually sold for!
Not the pie in sky hopes that the listed price usually indicates but what a buyer actually paid. Very important data for sure. And in the old days that piece of data was the most important piece.
Not anymore…
When agents prepares a CMA they usually select homes that are comparable to the subject and they rate the homes they selected.
A typical rating system is much like this;
1. Equal (=)
2. Inferior (-)
3. Superior (+)
If there are comparable homes on the market that are priced at 399,900 (-), 389,900 (+) and 384,900 (+) and they have been on the market 129, 95 and 80 days respectively.
Would it make sense to price your home higher or the same as ones that have not sold especially if they are superior or equal to your home? If you were a buyer and looked at nearly identical homes in a similar neighborhood and setting…which would you buy?
Now understand that the average sold prices indicate a value of 409,000 to 419,000…but nothing has sold in the last 4-6 months. The sold data is very old in terms of market movement.
It is very important to make sure your agent has analyzed the whole market. The Days on Market are very important.
If the average days on market “DOM” is 118 days…should a seller be panicking 60 days out without an offer? Depends on the seller and their needs.
Some questions to consider…How quick do you need to move? What is more important money or time?
Do you really need to sell? If not perhaps it would be better to wait the market out and list your home at another time.
Here in lies the dilemma.
Do you test the waters, list on the high end, play catch up and run the risk of stigmatizing your property?
Do you list below your best competition and hope your home sells first?
Do you list at a fair market price and do everything possible to make your home shine?
Only you can answer those questions. Make sure the agent you are working with understands the market and is realistic…you don’t need an unrealistic overly optimistic agent. You need sound market advice and an honest experienced REALTOR.
Pricing to sell is a must in New Hampshire.
Read everything you can, there are a lot of good New Hampshire real estate blogs full of excellent information available. Education and a good agent is the key to market success.
Read also:
Multiple Offers -A Bird in the hand
Don’t stigmatize your home by over pricing!
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About Monika McGillicuddy