The old adage in real estate is that a home is worth exactly what somebody is willing to pay for it. The art of setting a price, therefore, depends on an understanding of what buyers who are currently in the market are looking for, as well as understanding what the home is worth in the eyes of others, like lenders and appraisers.
Not only does a high price result in fewer buyers looking at the home, but it can also result in a home not appraising even if a buyer is willing to pay the asking price.
No Silver Bullet
Setting a price based on only one or two factors usually results in a mis-priced house, which can take longer to sell, and not obtain the best price possible.
Maybe you’ve heard that housing prices are up 5% from last year. Why not just take what you paid for the price and add 5% for every year you’ve owned it? Or what about those online websites that give a value for your home? Surely they’re accurate?
The truth is that there’s no single approach that works all of the time. Even appraisals can miss key pieces of information that affect the perception of value of your home in the market.
You Need a Strategy
Timing is another issue to consider. Some who are not in a hurry to sell may decide to price their home high, in hopes of finding exactly the right buyer who sees as much value in the house as the seller. If that buyer doesn’t come, they drop the price.
Other sellers, worried by the lack of showings, drop their price in hopes of attracting more buyers, without understanding how many buyers there are in the price range for that area.
A good pricing strategy evaluates supply, demand, value and timing, should predetermine when pricing adjustments should be made, and sets a price to attract the greatest number of buyers in the shortest period of time.
The Problem With Online Computer Estimates
Online services such as Zillow, Trulia and others provide estimates of home values that may seem reasonable (especially when they’re high). The truth is, however, that these estimates often overlook key things that buyers visiting your home may consider.
Incorrect data about the number of bedrooms, bathrooms or square footage can skew the results significantly. Some online models aren’t able to factor in features like number of fireplaces, outdoor kitchen, or proximity to the beach. Sometimes being on one side of the road or the other can make a difference of a million dollars!
These online models are good to review, but shouldn’t be the only consideration when pricing your home.
A Detailed Approach
At Terry A on 30A, we’ve developed an approach that considers multiple factors, including appreciation, tax assessed value, online valuations, price per square foot, comparative market analysis, absorption rate, and current market conditions.
If you’re thinking about selling your home, contact us to give you a free pricing and market review. We’ve helped many get the best price in a short period of time!