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Pricing your Home Accurately (#1 of The Big 3)

January 31, 2018 | By Schuyler Williamson
#1 of the BIG 3
“How do I sell my home for the most money possible?”

We started this blog series with the question above last month and you learned about “The BIG 3.” This post will dive a bit deeper into the first part of the three, “Price your Home Accurately”.

First, let’s reiterate why it is so important to price your home effectively from the start. If you price your property too high from the start, then it will be disqualified by buyers through software or opinion without ever being viewed in person. Here at Williamson Group, we create targeted online advertisements to motivate buyers to view homes in person because we understand that if nobody views a home, it is likely that no offers will be made.

When a house sits on the market for too long, buyers may have a negative mindset about the property. As an agent, I have witnessed this play out before. I meet a couple at a home, they mention that the home has been on the market a while and ask why I think that has happened. Together we all speculate, and then we walk into the house looking for what’s wrong with it rather than being excited that this could be the one for them.

Lastly, when it comes to pricing your home, you should never take the approach of "testing the market." Most people make judgments about a home the first time they see them and never change their mind. Even if you fix your pricing issue, a person may decide not to go see your home again because they already saw the home and decided something was wrong with it. The point to make here is: Price the home right from the start.

Pricing a home is part science and part art. Let's start with the scientific approach. The science behind pricing is the method appraisers use to determine their values. Appraisers start by looking at comparable properties that have sold recently in the immediate area. While looking at these properties, they determine what is different and award or deduct monetary amounts to eventually come to a final value for your home. For example, a property with a two-car garage will be awarded more value than a property without one. The important part of this approach is to ensure that your geographic area for comparable properties isn’t too large and that you are looking at homes that have similar characteristics such as: age, number of levels, beds, bathrooms, and square footage. Once you have completed your scientific analysis of the home price, you will have your baseline price.

The art behind pricing a home has a lot to do with an agent’s experience. My experience has taught me that a home’s price is determined by two things: the overall neighborhood’s pricing trend and the homes you are competing against at the time of sale. When a property is competing against other similar or recently updated properties, pricing will have to be more aggressive in favor of the buyer. When a property is not facing competition or when the condition of the homes you are competing against is below average, pricing will be in favor of the seller. The amount you move above or below the baseline price is not definite, so an agent will increase or decrease the sales price based on his grasp on what’s acceptable to the current market. The end result is a sales price that started at a baseline number and was modified slightly by an agent’s interpretation of the current market.

The market gives all home sellers immediate feedback on their price. Buyers will not look at extremely overpriced homes. Buyers may view mildly overpriced homes, but no offers will be made. Under-priced homes will generate multiple offers. Homes priced accurately will generate one or a few offers and will ultimately sell to the right buyers. The only status that ends with no offers is an overpriced home. If you are going to make an error on pricing, then make it by under-pricing the home. Your worst case scenario will be an offer that is too low. But, at least you are making a decision not to pursue an offer rather than waiting for any offer to come.

The Williamson Group has a great track record of pricing and selling homes and would love the opportunity to share with you how we would sell yours. Send us an email at Schuyler@wgrouprealestate.com or give us a call at 512-437-1059 anytime.