Pricing second homes/vacation homes is often more complex and more challenging than putting a price on a primary home. Seller motivations are different, time frames are different, even the level of urgency is different.
The most recent edition of The Residential Specialist magazine (pubished by CRS, the Council of Residential Specialists in Chicago) features an article by Donna Shryer entitled "The Fine Art of Pricing". The article is well-written and the information it contains certainly applies to primary homes. But second homes are a different matter.
The article states that sellers want and need data, preferring an evidence-based approach to pricing. Unfortunately, we find over and over again that our second home sellers tend to ignore whatever data we bring to a listing presentation. The owner of a cherished vacation home comes to a listing presentation with a flood of family memories. Moreover, the need to sell is less urgent than with a primary home. Primary home owners know they need another primary residence where they work and where their children attend school. Yes, primary home sellers have happy memories associated with their homes too, but their approach to selling a primary home is generally much more practical and rational than what we often see with vacation home sellers.
Agents who sell vacation homes know there is a distinct difference between the challenges they face and the factors that influence primary home sellers. Many of our sellers in Bayfield, Wisconsin or on Madeline Island wait until the last possible moment to make that decision to list their home. Sometimes they wait too long, perhaps until they are tax delinquent or have lost a spouse and need money. We see far more sellers' remorse than buyer remorse in our second-home market, right up to the closing.
It's far more difficult to use comparables in pricing some second homes, particularly in areas where demand is sporadic and unique properties abound. For example, if you're selling an $800,000 home, the number of buyers who are able to buy that home is a tiny fraction of our total annual buyer traffic. If we manage to sell one or two homes in that bracket per year, and the sold comps are very different from the property we are pricing, those comps become less useful to us in determining a market price.
Finally, the article mentions a strategy for lowering the price if the home does not sell in, say four weeks. The problem with this is that very few homes in our recreational market sell that quickly. We have sold homes which were priced correctly and which sold at 98 per cent of the original list price that took four to six months or longer to sell. Clearly, the second home agent needs a different formula for proposing such a re-pricing strategy.
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