Pricing Your Home

How to Price Your Home

Now is the time to be objective about your property (hence, the term "property" rather than "home") and look at the comparable sales prices in your neighborhood over the past 3-6 months. Prior to our initial meeting, I will prepare a comparative market analysis based on your specific neighborhood, which examines the following data:

• Sold Properties: Purchase price, Seller concessions, and days on market (DOM).
• Under Contract Properties: Asking price, DOM, proximity to your address. After the sale closes, I will find out the sold price and Seller concessions.
• Withdrawn Properties: A very telling piece of the puzzle, this usually indicates an incorrectly priced home.
• Distressed Properties: How many foreclosures, lender owned, and short sales are in your immediate neighborhood?
• Active Properties: Inventory, DOM, ask price. Prior to meeting with you, I will identify and preview the interiors of the three closest comparisons to determine the condition, upgrades, location, etc.

At this point, we'll sit down and thoroughly review the data, so you can make an informed decision on price setting.

Dangers of Overpricing

Overpricing can lead to subsequent price reductions and leave prospective Buyers with the impression that they can offer and receive a bargain basement price. Additionally, the excitement of the "MLS Debut" is lost as days on market increase. Eventually, prospective Buyers lose interest, think they can low-ball on price, or wonder what is "wrong" with the property.

Supporting this theory, a study titled, "Listing Price, Time on the Market, and Ultimate Selling Price," published in 2002 and conducted by John R. Knight, a professor at the University of the Pacific, examined 3,490 Stockton, Calif. homes and found:

"Sellers who didn't reduce their prices sold for 97% of the initial list price. Homes with a price reduction sold for 88% of initial list price." (Soft Market Secrets to Selling a High-End Home, www.Forbes.com, 01/03/08).

This study was conducted in the late 1990's when we were in a Seller's market, so it would be fascinating to see what the figures would look like today.