Home Base: How to Price Your Local Home
01 May, 2014
By Megan McCarthy
Accurate pricing is the make or break of successful real estate sales. An overpriced home sits going stale on the market, ignored by agents and buyers alike. Then, in an attempt to recapture buyers, the price is lowered — which can result in the home selling for less than it would have if accurately priced from the start.
How important is pricing? Here are a few examples from the Mamaroneck School District:
– The least expensive single family home on the market — on Howard Street in Mamaroneck Village — originally listed at $189,000 and now a thousand dollars off at $188,000 “won’t last at this price” yet has, for 598 days.
– An attractively renovated four bedroom home on Forest Avenue in the Town of Mamaroneck has lingered 211 days while its competition has gone to contract; might buyers perceive the $1,100,000 price tag as too high?
– A lovely home on Kilmer Road in Larchmont Village, originally listed in October, 2013 at $1,375,000 and now reduced to $1,199,000, has met its fair market value and is under contract as of this week.
Establishing the best strategic listing price for a home is a science, involving thorough knowledge of the marketplace, buyer psychology and taste, shifting market trends, etc. It’s important too that the homeowners we agents represent participate in and thus trust our analysis. We:
– Study comparable sales in the neighborhood, focusing on homes under contract or sold in the past 3-6 months. Analyze the days on market, absorption rates, and the differential between listing and selling prices.
– Analyze the competition — homes currently for sale in the community. If there’s an empty spot in the home’s price range, take it. That makes your home stand out.
– Take into account the time of year. High demand periods, such as the “spring” market (February – June), often fetch higher prices.
– Include location, placement of home on its site, views, proximity to conveniences, etc. in our thinking.
– Think like a buyer. Knowledge of buyer psychology and shifting tastes is key. Also, buyers will compare your home to similarly priced homes they’ve seen.
– Consider pricing strategies to drive up buyer excitement. Sometimes, listing the home a notch “under” can result in competing bids which drive up the price.
Our homes are the heart and soul of our family life, and reflect us as unique individuals. Our homes are also — for most of us — our largest financial asset. Accurate pricing is the first vital step.