So many times when I speak to people, whether they are possible clients or people I meet when I'm out and about there's a misconception that a Realtor sets the price of a home when it's listed.
In reality, it goes back to the market and that "supply and demand" rule. Most everyone knows, when there's a large demand for something and not much product, the prices will raise but when there's a lot of product and a limited demand, the prices will go down.
I'm not writing this to get into a lengthy discussion about the economy or the stock market, what I hope to accomplish is an explanation for the general public on how price is arrived at when listing.
Most Realtors will go to their Multiple Listing Service and run a search of the area the prospective home is located. Some of the search criteria is what is active, what is sold, what is pending and what has expired? Homes that match the prospective home in square footage, style, year built and ammenties will be used to help determine the price. Another rule of thumb that is normally used is to go back six months to find these comparable homes. (I've started to shorten that time frame at least on the pending and solds. Six months in many cases is out-dated.) This will give us a general idea of what the market/buyers are normally willing to pay to purchase a home like yours.
Currently, we are in a market shift. Homes where there use to be a general appreciation each year to the value of the home are now either staying flat or in some cases, depreciating. This is hard for most homeowners to accept. Especially if you have done improvements to the home only to find it's not worth anymore today than it was when purchased 2-3 years ago. Or worse, it's worth less.
It is difficult for all (Realtors, homeowners and buyers) when these markets periodically shift. The online appraisals or evaluation tools are not as acurate and current as they once were. Most of the information is six months old or older that is input into their knowledge base. This in turn could hurt a homeowner something fierce. This older information might have a home sit on the market forever, only to disappoint the seller that his home doesn't sell and stigmatize it.
As a concerned and caring Realtor, I find it important to be consultive with other agents and with my clients. It's information we all need to make informed decisions. It's also important to the buyers. Over paying for a property or not knowing if it's priced fairly can hurt them too. That's why I find it important to run a buyers-comparible before writing an offer.
I know the trend these days is to do a lot of our research online. It's not a bad place to get ideas and learn, just remember, that the information out here is only as current as the time frame it was input in cyber space.
If you have a comment or would like pricing information I'd love to hear from you. My website is www.cyndisloop4indyhomes.com.
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