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Top skill of a listing agent: pricing homes for sale, correctly.

Reblogger Joe Jackson
Real Estate Agent with Keller Williams Capital Partners Realty 277320

Critical skill indeed! Pricing a home correctly is essential for a successful sale. This blog likely elaborates on the importance of this skill and offers insights into pricing strategies. Looking forward to learning more about the art of pricing homes for sale!

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

Original content by Andrea Bedard MD594797

Experienced REALTORS® make it look so easy (at times to our detriment.. but that's a different blog post). We confidently recommend an optimal list price range that sometimes falls right in line with estimates you saw online, and other times it's more or less (by a lot). It's also pretty obvious to us when a house is overpriced, perhaps not at first glance but close enough. It's the years we spent honing our craft, the hours spent touring homes, the research, keeping up with market trends and neighborhood developments, and the networking with other agents and appraisers that all contributed to developing and fine-tuning that skill. Yes, pricing homes for sale correctly is a skill because it takes more than aggregating some data.

So how do we come up with the list price we recommend? I can't speak for all Real Estate agents, of course, but here's my approach.

Let's start with what I don't do:

1. Look up AVMs (automated value models) on 3rd party websites popular with consumers and run with them. These models provide a ballpark at best and a completely misleading guesstimate at worst. Why is that? The comparables used are not always actually similar. They can be a different type (townhomes vs. detached or colonials compared with ramblers), or in a not comparable neighborhood. Sometimes the values include refis pulled from public records, completely disregarding the fact that often refinances are well below market value. While I do always check what these sites think your house is worth, it is not how I arrive at my recommended price range. 

2. Establishing a price range and then adding on our negotiated commission. Recent news coverage may lead you to believe that this is how it's done but it is completely false. The value of your home is always based on the most comparable sales, that is closed listings that have ideally settled within the last 90 days (or longer if the market dictates). Appraisers will also not subtract the commission from the contract price to arrive at fair market value. That is just not how it works. They may, however, include one or two active listings to support the value. 

3. Pricing your home based on what your neighbor sold for, or how much money you've invested in the property. Regardless of differences or the time that has passed since they sold. Most comparable is really key here! If your neighbor's home is a 3,000 square foot Colonial but your home is a 1,500 square foot rambler, then it is not a relevant comp. Time also matters - especially in a declining market (that's not the case now but Real Estate is a cycle and at some point in the future it will shift again to a more balanced one, or one that gives buyers the upper hand). Improvements do increase the value of your home (updated kitchen & baths, or new hardwood floors for example). However, some items are considered maintenance that do not necessarily add value to your home. These can contribute to the overall condition, and are attractive to buyers, but you won't see a value adjustment for a new water heater for example.  

What does matter when pricing your home correctly? 

1. The most recent sales that are most comparable to your home. Recent, however, can vary based on location and market activity. While I can't predict which recently sold homes end up in your home's appraisal, I do approach pulling comps with the appraisal in mind. It is my business practice to always meet with the appraiser and provide a package to them with all relevant information, including the comps we considered with adjustments made.  

2. Improvements and unique features, or deficiencies and obsolescence. Does your home have a recently remodeled kitchen while the most recent comps had an outdated one? That matters. Did you build an addition increasing the GLA (gross living area) that comparable homes lack? That matters. On the other hand, it also matters if your home is fronting a busy street while the comps nearby are backing up to parkland. It's important to note that while a finished basement adds to the appeal for buyers, it is not treated the same as above-grade square footage.

3. Neighborhood knowledge and - if possible - a visit to listings that could become comps. When I start working with a seller, I keep a close eye on all sales activity and make an effort to look at new listings in their neighborhood that could be relevant to their sale. While an appraiser does not set foot in the most recent homes sold, we can - and should - while they are on the market. Floors don't creak in pictures, and deficiencies are not always obvious in professional photography. With that firsthand knowledge, I can point out to an appraiser when a comp was of different quality or needed much more TLC than is evident in its virtual presentation. 

Skills of a listing agent: pricing homes, correctly.Pricing your home is not a matter of checking what Zillow and Co. have to say, but preparing a comparative market analysis, adjusting for any differences, and having knowledge of your neighborhood, its appeal, and current market trends. 

When you interview agents to list your home, don't just ask how much, but listen to their explanation. How do they justify the recommended price? Going with the highest may be tempting, but it may not be the price a buyer is willing to pay, or an appraiser will support. Overpricing your home will cost you valuable time on the market, it may stigmatize your property and have buyers wondering what's wrong with it. In the end, it may cost you more than pricing in the correct ballpark to begin with. 

Skills of an experienced listing agent, pricing homes for sale, correctly. This skill also includes knowing when to recommend, or facilitate, a pre-listing appraisal. Some homes are just so unique with comps few and far between. While it cannot be used by any buyer, it does help establish a list price and a copy can be made available to interested parties. 

Andrea Bedard
Thompson Co., REALTORS®

Silver Spring, Maryland
andreabedard.com

Fluent in Real Estate and German.
Old house lover.
Accredited Buyer's Agent.
Certified International
Property Specialist.
REALTOR® on the Run.

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Andrea Bedard
Thompson Company, REALTORS® 240.593.2860 - Silver Spring, MD
Fluent in Real Estate & German, M.A. ABR ASP CIPS

Thanks for the reblog, Joe Jackson! I'm so glad my post resonated with you! 

Apr 16, 2024 11:35 AM