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.
Comments (5)Subscribe to CommentsComment