| In a competitive market with fewer buyers, more | | | | subject's price based on how the other homes |
| homes for sale and longer market times, you | | | | faired in the market. The key to this method is |
| want to do everything you can to be sure your | | | | location: all of the homes considered must be in |
| home doesn't linger on the market. An explanation | | | | fairly close proximity to the subject house. |
| about why listings expire without selling and often | | | | Including homes outside the general neighborhood |
| without a single offer become harder to sell at | | | | decreases the accuracy of your comparison. |
| the best price. | | | | Point 2 - The second step is to compare price per |
| In a competitive market with fewer buyers, more | | | | square foot. This works well if the comparables |
| homes for sale and longer market times, you | | | | are pretty much the same with the amount of |
| want to do everything you can to be sure your | | | | finishing, garages, etc. The result gives a range of |
| home doesn't linger on the market. Listings which | | | | consideration. The subject home's condition |
| expire without selling and often without a single | | | | influences whether the appropriate target price is |
| offer become harder to sell at the best price. | | | | at the higher or lower end of this range. |
| While you can't control the market or the buyer | | | | Point 3 - An Area Market Survey (AMS) considers |
| pool, there are things you can control when trying | | | | the overall current market conditions. By |
| to sell your home. We've already addressed how | | | | comparing the number of homes currently |
| home condition, staging, and aggressive marketing | | | | available with the number sold over the past year, |
| can improve the odds that your home will fare | | | | we estimate the absorption rate or how long it |
| well against the competition. The final element is | | | | would take to sell out of all the current homes for |
| setting the right price. | | | | sale. A high absorption rate generally reflects |
| The key here is "the right price." A home in | | | | higher inventories and longer market times with |
| perfect condition, staged well, and aggressively | | | | the implication of softer prices in the future. A low |
| marketed will sell for top value when the price is | | | | absorption rate is usually a sign that prices are on |
| appropriate given market conditions. The price will | | | | the rise. Knowing how market conditions are |
| suffer if any of the three elements is | | | | trending can help you decide how aggressive or |
| inadequately addressed. However, if a home is | | | | conservative you should be with your pricing. |
| overpriced it won't sell, even if it is in pristine | | | | Point 4 - Finally, the current competition in the |
| condition, shows well and is marketed | | | | targeted price range needs to be considered. |
| appropriately. | | | | Analyzing the pros and cons of those homes with |
| A home's asking price is the final determinant in | | | | respect to yours can help you fine-tune your |
| how quickly it sells and whether the sale price | | | | pricing strategy. Potential buyers will compare |
| approaches the home's value. | | | | your home to the competition so it is very |
| A quick word about "the home's value." Basically, | | | | important that you do so as well before setting |
| a home's value is what two parties agree on as a | | | | the price. If your home is the nicest in the price |
| selling price. It doesn't matter what you paid for it, | | | | range you should be in good shape. However, if |
| how much you have spent for maintenance or | | | | there are other homes just as nice or nicer in the |
| improvements, how much you need to get out of | | | | same price range, you need to adjust accordingly. |
| it, or what the county's assessment says. Market | | | | Remember that these homes have not sold yet |
| conditions are much more important in | | | | and they may need to come down in price |
| determining your home's worth at that moment in | | | | before they do. You are better off pricing slightly |
| time. The bottom line is determining at what price | | | | below ALL of the competition to insure a |
| range you will find a buyer who is willing to pay | | | | profitable sale. A lower initial asking price and a |
| that amount for your home. | | | | quick sale are more likely to put more money in |
| So how do you determine an asking price? | | | | your pocket than a higher asking price that needs |
| Appraisal, county's assessed value, replacement | | | | to be lowered several times over a longer |
| cost, and current competition are some of the | | | | amount of time. |
| ways a home's value can be determined. The | | | | Once you have studied all 4 indicators look for a |
| best way involves a combination of all of these. | | | | convergence of value. That price is usually the |
| Several years ago I developed a very accurate | | | | right price! |
| pricing method that I call "4 Point Pricing." | | | | Ultimately, the decisions you make will influence |
| 4 Point Pricing | | | | how quickly your home sells. If you are willing to |
| Point 1 - The appraisal method (often referred to | | | | take the time to prepare your home for sale, |
| as a comparative market analysis) considers | | | | select a realtor who will aggressively market your |
| three other homes in the immediate area making | | | | home, and carefully assess market conditions |
| adjustments for quantifiable differences such as a | | | | when setting your asking price, you can increase |
| finished basement, more or less square feet, | | | | the likelihood that your home will sell quickly and |
| garage stall count, or walkout lower level. This | | | | for top dollar, regardless of the market conditions. |
| initial consideration gives an indication of the | | | | Copyright © Shawn Buryska. |