By Deborah Kearns
It’s not surprising that sellers want to get the most bang out of their resale buck when it’s time to put their homes on the market. But sometimes their desire to score a high return at the closing table can result in an overpriced listing that doesn’t sell or fails on appraisal.
That’s where your expertise comes in. To keep sellers’ expectations in line with market realities, here are five strategies to price listings right from the start:
1. Determine the real market value – Buyers aren’t going to pay top dollar for a home if the comparable listings in the area are priced at or below market value. Research the area comps by performing a comparative market analysis, or CMA. Find out what’s currently on the market and what similar properties sold for in the last three, six and 12 months. Having this data in hand helps you make a stronger case for why a seller’s proposed price is too high.
2. Stick to neat, rounded figures – Some sellers want to list their homes at random, creative prices like $289,777 as a way to stand out from the competition. Unfortunately, though, this strategy makes potential buyers scratch their heads and it distracts them from the great features of a property. Keep it simple by advising your sellers to go with a simpler listing price. Picking rounded figures is always a safe bet.
3. Avoid the need for multiple reductions – Sellers don’t understand that overpricing their homes up front can cause properties to languish on the market for weeks or even months, which requires numerous price reductions. When homebuyers see multiple reductions on a listing, they might assume something is wrong with the property or a seller is difficult to work with. Setting a competitive price at the start negates the need for multiple reductions while shortening the time on market.
4. Appeal to the widest range of buyers in online searches – Sometimes sellers want to build in “negotiation” room into their sales price, but in doing so they limit the pool of potential buyers who will see their listings online. If a seller wants to list at, say, $315,000 with the hope of netting $305,000 or $300,000, buyers who’ve set their online search criteria for properties up to $300,000 will miss the listing completely. Setting the list price at $300,000 or slightly less ensures that a larger range of buyers will see the property, which generates more showings and, ultimately, more potential offers.
5. Order a pre-appraisal – A pre-appraisal is no different from a standard appraisal, except it’s completed before the home goes on the market and anyone can pay for it. Some sellers have found out the hard way that accepting an offer that’s well over market value results in the property’s failure to appraise at the contract price, which can kill a deal if buyers can’t make up the difference. A pre-appraisal performed by a certified home appraiser, who evaluates the home’s condition, size and improvements objectively, provides added reassurance and confidence in pricing a listing right from the start.
Deborah Kearns is an award-winning writer based in Denver with more than a decade of experience in corporate communications and news journalism. She has covered the real estate industry for more than seven years.