Understanding how to price a home is this market is, at best, challenging and difficult. Because real estate is so local, totally local it becomes problematic for buyers, sellers and REALTORS to actually understand their market and translate the constant media attention given to real estate currently.
One of the most often cited sources for tracking home prices if the NAR Median Sales Price reporting. These figures are truly a median measure. Each quarter they evaluate 150 metropolitan statistical areas (MSAs) and translate the results into a median home price that is expressed in a dollar figure. While this information, by nature, includes only sales in which a REALTOR participated, the numbers are very accurate since only 12% of sales in 2007 did not involve an agent or broker.
While this resource is helpful for general information it is imperative to remember that real estate is very local and various communities within a metropolitan area will very widely. Pricing a home is not easy and should not be done emotionally or with a bias. According to the National Association of REALTORS, in 2007 74% of sellers were assisted by agents in determining the list price of their property and 80% used the services of an agent to review offers once received.
Sellers should work with a REALTOR who understands their particular market and the nuances that exist within that market. They should be prepared to take the advice of the REALTOR who will suggest ways to improve curb appeal, stage the property, ready for showings, and position the property so that it compares favorably against the competition. A big part of the equation is pricing!
No more are we in a climate where a seller can "try" to get a certain price. There is just too much inventory and only the properties that show well and are priced well are getting attention. Be very aware of the competition that you face, make sure your REALTOR is weekly letting you know what the market is doing and act accordingly. It is my belief that one needs to evaluate the competition and then slide just below them in pricing. This is not a market in which you can wait to see what happens. You need to be ahead of the pricing curve to attract the buyer. Remember, a quicker sale results in less mortgage payments, utility bills, yard card, snow removal and, in many cases, double living expenses. Every month you remain on the market your gain is reduced by the cost of holding the property.
When a price reduction is in order it needs to be significant and noticeable! Don't try a $1000 price reduction! Try to price the property with a new price that exposes it to a new pool of buyers. I recently had a property very competitively priced at $249,900. After a number of weeks we reduced it to $239,900 and still were not getting activity. Finally the seller agreed to reduce the property to $229,900 and we began to get a number of showings. The buyers who ultimately wrote an offer could not afford a home over the $230,000 mark and were just watching and waiting for new listings to become available. Within one week we had gone to contract with a sale pending in a couple of weeks. Let me also add that these sellers had done everything right...from staging their vacant home, repainting almost everything, paying attention to the details that made the property look immaculate and attractive. Having done all of that it all came down to price.
It is a wise (and usually successful) seller who remembers that in real estate, unlike almost any other commodity, it is the BUYER who determines Pricing!!