In last week’s blog, we discussed the importance of timing the listing to go on the market. We made mention that timing may be different based on the type and location of the neighborhood and the amount of buyers that are typically drawn to it.
This week we want to look at the MOST IMPORTANT part of the property listing. Pricing.
Without argument, the most important part of the home sale process is the home’s pricing. As important as timing, staging, and property conditioning are, they will not trump bad pricing. One of the most important responsibilities of the Realtor professional is to provide an accurate market analysis of the property’s value. The other part of this equation is the seller being on board with the right price. Trust in your Realtor professional’s price opinion will go a long way toward a successful and timely transaction.
In determining the right listing price, the Realtor professional needs to show the homeowner not only the neighborhood comparable sales during the past six months, but also the current “Pendings” and “Actives.” If the market is feverish (either rising or falling) then sales should only go back 3 months. If it’s a slow, plodding market, with little price change, we can look at sales longer than 6 months, but lenders may not.
Why do we look at Pendings and Actives? Well, for one, Appraisers look at them, because lenders want to know what’s going on in the overall market. Pending sales can be the MOST accurate gauge of CURRENT sales activity and values, but since they may not close and we may not know the closing price yet, best practices would dictate using only closed sales.
Active listings are used to help determine the competition. If for example a similar floorplan has been for sale for 6 months and has not sold, we will want to compare that listing with our listing to ask why hasn’t this listing sold? Usually, nothing less than a phone call to this other Realtor is in order. This is where Realtor experience and savvy could be the difference in getting top dollars.
So now comes the time for structuring the listed price. If the recent comparable sales dictate a $375,000 sales price, should you price it at $375K? This is where knowing the current market trends is key. In a normal market we would probably advise a price slightly about 3% above the sold pricing. In a slumping market, we would probably want to price it no higher than comps. And vice versa in a strong appreciating market, pricing slightly more than that may be in order. Either way, if we have priced the property correctly, we’re pretty much assured that a sale won’t get “kicked out” of escrow down the line by the buyer’s lender but will close as scheduled.
And in the end, closing is the goal right?
Next week, we will look at what should take place in property preparing the home for sale.