How to Price a Home to Sell
Who remembers The Price is Right game show that premiered back in 1972 with its longest running guest hosts, Bob Barker up until 2007? It’s one of an all time great American television game show ever created. In the show you’ll find contestants competing for cash and prizes. They win by being able to correctly determine the prices of the merchandise on display. Do you remember how they chose the participants? The famous phrase, “Come on down”, had selected contestants from the studio audience running towards the stage after the announcer called out their name. Then they were ready to win the cash and prizes and all they had to do was guess the right price just by looking at the merchandise. Imagine this playing out in the pricing of a home, not good at all.
How do Home Sellers lose when The Price is Right game is played out in Home Selling?
Realtors (Contestants) are selected to be interviewed by the homeowner to sell the owner’s home when (“Come on down!”) welcomes the Realtors. Their win or selection of the right price on the Home (merchandise) enables them to win the listing (prize). Too often the prize fogs the Real Estate Agents decision and greed takes over when the Realtor tells the homeowner the price they want to hear, which isn’t a winning pricing method.
Wouldn’t it be nice if you just had to look at a home’s exterior and you could identify the right price to get it sold?! You will find that sometimes home Sellers will get foggy about how to price their home for sale. This fog often comes from their emotional attachment and naturally think their home is the best in the area and aren’t interested in basing the price upon what the local Real Estate market will bear; what a Buyer assumes is fair market value to pay for their home. They will choose the Realtor to sell their home when the Realtor identifies the right price, and the right price to them is often the price the homeowner thinks their home is worth. They interview Realtors by telling them to “come on down” and share what you think our home is worth. Quite often Realtors want to win the prize of a new home listing and will agree with the homeowner, as if they just guessed upon an initial viewing, kind of like those The Price is Right contestants do. If only it were that simple.
Unfortunately, in Real Estate home selling, you’ll find that pricing games are used. Crazy pricing games often pop up when it’s time to sell a home too. It’s always best to avoid the pricing games when you want to sell your home.
Just what are the right methods to price a home?
- To complete a comparable market analysis, commonly referred to as a CMA. The analysis will include examining local area homes that are within close proximity to the home to be put up for sale. I look at recent closed home sales, typically within a 3 month period and may go further back in time to 6 months, if needed when there isn’t enough data in the shorter time period of 3 months.
What will we be looking for in the comparable home sales?
I look at the closed homes and how they compare to the home that you want to sell. How do the homes compare to yours? If your home has upgrades in the Kitchen and Bathrooms, for example, I’ll look closely at other homes that have sold with upgrades.Or if your home doesn’t have upgrades, I’ll look at other homes having sold without upgrades. Any adjustments would need to be made if the home being compared to yours differs in regards to upgrades or not.
What about the condition of your home? Is your home in top notch condition or are such things as your roof and air conditioner on it’s last leg? If so, adjustments will need to be made if a recent home sale reveals a brand new roof, for example. How have you cared for your home over the years? Can you tell your home has been well taken care of, or is it in less than pristine condition? Know that your home’s condition has added value when well cared for over time.
Where is your home located? Is your home 2 blocks away from the golf course home that just sold? Yes, you’re getting it now, aren’t you, an adjustment will be made. Or is your home located on a nice wide waterfront and the recent closed home sales are all without a waterfront lot? Here we’ll have a positive adjustment, in your favor.
Review Closed home sales – Again, recent closed sales, typically within a 3 month period and perhaps even further back to 6 months, if needed, will be reviewed. These homes will be analyzed in how they compare to the home you want to sell.
Review Pending home sales – What homes are currently under contract, yet haven’t closed yet? How long were they for sale before they went under contract? All good indications of the strength of the home’s list price.
Review Active homes for sale – What will your competition be, once your home gets listed for sale? Where will be the best spot amongst the competition to set your home selling price? Setting the same price as all the others will only get your home lost in the cluster of homes for sale. It’s best to stand out from the competition.
- Ignore Zestimates from Zillow. If I could tell you the number of times I’ve heard Zillow referenced as the go to place for home pricing, we’d be here all day with the stories I could share! As early as last week, I even had a friend mention it to me in a conversation saying, “Well, when I checked Zillow…” Are you kidding me, I hollered! I think it would be more apparent to people if they really thought long and hard about it. How can Zillow know about a home’s condition, it’s upgrades or not, it’s lot location and the functionality of a home? It’s impossible, as their algorithms have no way of “seeing inside” the home. With this in mind, how could their values be always accurate? They can’t, it’s that simple. Their estimates have been known to be off by both small and large dollar amounts. You might be better off just aiming and throwing at a dartboard to choose your home’s selling price. Sometimes, their values are in a fair range, but how will you know? Are you willing to risk their accuracy? For more proof, be sure to read more all about Zillow inaccuracies
- Ignore what family and friends suggest. We’ve all heard it; our family and friends who are experts at everything! They’re the first to tell you how much you should sell your home for as they heard from a neighbor a few blocks over that sold their home for such and such and it’s the same size as your home. It may be the same size, but their home was completely remodeled, did they tell you that? Everybody thinks they’re an expert, but ignore them, unless you’re speaking with a highly skilled, local Real Estate Agent.
- Ignore a simple price by square foot calculation. If only it were that simple. Compiling a CMA, as discussed in #1 above, is the only way to calculate a price. Pricing a home simply by it’s square footage puts everybody’s home as a cookie cutter home. Home’s are not cookie cutter. Homes are filled with function, design, features and condition. Calculating a home’s selling price by square footage would have to totally disregard such aspects of a home. It just doesn’t make sense, does it? Again, it takes me back to what I mentioned earlier, if you just think about it a bit, you’d realize that pricing by a square foot calculation is simply ludicrous!
- Don’t price your home higher than what you’ll settle upon. This is a common thought when homeowners want to leave room for Buyers that try to haggle with them. When you leave room to negotiate, haggling is exactly what you get. For more on this home pricing method, read another article here.
- Utilize the art of pricing homes. When you ask an artist how they created their work of art, they will hem and haw, as they really can’t describe to you or give you a formula for how they create their works, as it’s art, there is no black and white to art, they just do it. The same can hold true for pricing a home to sell; it does involve a bit of art when you find yourself good at it.
- Don’t use The Price is Right Game Show method. Yes,this method rarely would work when you simply look at a home from its exterior and decide upon a price.
In conclusion; hire right to price your home and avoid the pricing games, you’ll be glad you did!
If you’re located in my Southeast Florida Real Estate market and need to sell your home and want to avoid the pricing games, call me, I’ll get your home sold at the right price. Or if you’re reading this from across this great nation and need a REALTORⓇ , call me too, as I have fabulous REALTORⓇ friends likely near you who you’d be thrilled to have as your REALTORⓇ.
Today’s article ““Come on Down” to price a home like The Price is Right Game Show – Really?” written by Lynn Pineda. You’ll find Lynn selling homes in Southeast Florida in the cities of Coral Springs, Parkland, Margate, Tamarac, Coconut Creek, Boynton Beach, Delray Beach, Boca Raton, Sunrise, Plantation, Ft Lauderdale, Pembroke Pines and Miramar areas within Broward and Palm Beach counties.
Lynn Pineda, a licensed Southeast Florida Real Estate Agent serving Coral Springs Florida and surrounding Southeast Florida. Keller Williams Coral Springs Realty. Real Estate Promises Delivered. You can speak with Lynn by calling/texting her at 954-464-1100 or you can email her at: LynnP@ImagineYourHouse.com if you need to sell or buy your Southeast Florida home. Your local, trusted professional when it’s time to buy or sell your home. Real Estate promises delivered.