Why Pricing Your House Can Be Tricky Now

By
Real Estate Agent with Better Homes and Gardens Real Estate-Kansas City Homes

I almost titled this blog Why You Shouldn't Rely on Comps to Price Your House...and any agent reading my words knows what I'm talking about.  Comparable sales that closed  in January through May  may not be relevant in this fast changing market. Often, sellers don't understand why...so let me explain.

Yesterday I was visiting a past client who wants to sell their home in September.  It's a beautiful home in a very desirable area, excellent school district and well maintained.  Mr Seller announced:  "I want to list it at $600K!  Two neighbors got that price so that's what we are expecting."  Checking the subdivision comps, there are indeed two $600K sold properties.  Both listed in February, closed in April,  were listed around $525K and  had bidding wars.  A median sales price for the neighborhood is just over $500K.  I can understand why he would expect $600K list price, and there are comps to back it up.  "We can always lower the price if needed"--that's a familiar seller phrase as well.

What many sellers today don't understand is that homes that closed in the past few months were listed when there were fewer listings to pick from and when interest rates were 2% or more lower.  Bidding wars were more common, appraisals and inspections were often waived.  It is  not the same home sales market--!  I'm seeing more flipped contracts, more price reductions, fewer multiple offer situations, homes 'sitting' on the market for a week or so  and buyers not bidding prices up as much.  

Earlier this week I received a call from a seller, it was not my listing, and he was asking me if I had any buyers I could bring through this weekend.  His house was listed a few days before  and he didn't have any offers--he was panicking. He wanted to "do something" so he was calling agents trying to get them to show it.  I knew which house was his (as  I monitor that area) and at least online, the photos look great, enticing MLS description, good location and priced well.  So many sellers today are expecting several offers within the first few hours on MLS and then freak out when that doesn't happen. 

In March, I listed a truly spectacular home that had 18 offers and sold for $100K over the list price.  Would that happen today? As stunning as that house was, I don't think so.  Yet technically that house is a true comp for that neighborhood, and any nearby seller  might expect a similar situation. 

So....how to price a house?  Certainly comps should be considered but those recent sales (2-4 months ago)  that closed  with bidding wars--be wary of matching any wildly inflated  sold price.  My personal opinion is to discuss all comps, especially regarding location and condition as usual--as well as how far over the list price some sold for.  Look at pending sales and contact the listing agents for helpful information if they are comfortable sharing (how many showings, was there a bidding war, etc). What are agents in your office experiencing?  Look at the past sales trends for 30 days. Study the currently listed homes. Don't worry  so much about pricing until a week or so before the listing will hit MLS--the market is changing every day. Sellers can let the market drive up the price....or they can let the market deflate the price. After all, a house is worth what someone is willing to pay for it. Be sure the buyers going through your house feel it's worth the list price, no matter what the comps say. 

 

Posted by

Mary Hutchison, SRES, ABR

(Brookside/Armour Hills resident, local business supporter, NPR fan, Habitat ReStore volunteer, thankful for the gift of another day!)

**********

Better Homes and Gardens Real Estate/Kansas City Homes

mary.hutchison@kansascityhomes.com

816 510 1262

www.maryhutchison.org

 

Comments (5)

Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Mary, so timely for this post, and absolutely cannot look at solds from early this year.  Best to use solds for the past 30 days.

Jul 19, 2022 02:20 PM
Mary Hutchison, SRES, ABR

Thanks for the comment Joan!

Jul 20, 2022 06:53 AM
Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI
HomeSmart Real Estate - Scottsdale, AZ
Arizona Homes and Land Group/ Buy or Sell

I agree Mary. In May and June the record high "median" SOLD prices of $475K was set after 2+ years of price increases in our Phoenix Arizona metro. Based on early contracts the July expected median SOLD price is expected to decline to $450K. Difficult for appraisers.

Jul 19, 2022 03:41 PM
Mary Hutchison, SRES, ABR

It's a challenge to have sellers understand this when all they have been hearing is how crazy high the sales are!  The higher interest rates are definitely having the intended effect.

Jul 20, 2022 06:55 AM
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

This is an excellent post with great information. Thanks for sharing it.

Have a super fantastic week!
Joe Jackson, Realtor-KWCP

Jul 20, 2022 05:44 AM
Mary Hutchison, SRES, ABR

Thanks!  Appreciate the compliment!

Jul 20, 2022 06:55 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Great post, Mary... I was just saying to a client last week that it was tricky pricing homes the last couple of years with home prices appreciating so quickly... now it's still tricky but for a host of other reasons.

Jul 20, 2022 05:59 AM
Mary Hutchison, SRES, ABR

Thank you Nina!  Hopefully sellers are listening!!

Jul 20, 2022 06:56 AM
Wanda Kubat-Nerdin - Wanda Can!
Red Rock Real Estate Brokered by Real - St. George, UT
St. George Utah Area Residential Sales Agent

Thank you for being the voice of reason in this new market that has presented, Mary. People looking to get multiples at a higher price may sit on the saturated market now, they missed the feeding frenzy!

Sep 01, 2022 06:14 PM