It’s very tempting to want to choose your own price. There’s all that information out there on the web, real estate portals, town market updates, newspaper articles and much more. There’s also your friends and the neighbor who sold their house five years ago in a different market. Usually when people call me in to list their home they have already scoured all the information available and come up with their own idea of what the price should be. It’s been my experience that sometimes they can be right, but most times their price is not right for current market conditions.
Your friends and neighbors, when they find out you are selling your house, will all have an opinion … which is usually based on some anecdotal data they heard from a third party or based on their experiences. They often are much higher than your house is really worth, but it makes you feel good to hear it and you soon start believing it yourself.
Next is the elephant in the room, the zillow “zestimate”. According to a recent article in the Boston Globe, a zestimate is not the price that your home is really worth. They quoted Cory Hopkins, Zillow’s public relations manager for data, who said” a zestimate is a starting point and should be used in conjunction with guidance from local real estate professionals who understand the market and know your property.” Bottom line, until a computer algorythm like this can go inside your home and compare it with similar homes it has also been inside, the results it predicts are suspect.
As I like to say, pricing is 50% science and 50% experience. The data available to the public is usually about a month behind the market, because “sales” don’t get recorded until the money and deeds actually change hands. This can often be 45-60 days after a property has accepted an offer so while in slow markets this is fine in hot markets you might be leaving money on the table if you’re using stale data. Local professionals are right on top of the market to today, so they know what has sold and approximately for how much well before the data becomes public. This is power to be used for your advantage.
To set your price I use a clearly defined process that is repeatable and yields consistent, accurate results, (my list-to-sale ratio is 96%, industry average is 92%) here’s how it works:
First, I have to walk through your home in order to put a price on it. This is usually a half-hour exercise, but is very important to the process.
I then use the information I collect, such as updates, additions and improvements and compare your home with other houses that I have been inside with similar fits and finishes. If I can’t find ones I have been inside I often make arrangements with the realtors or homeowners to do a quick tour to be sure that I’m really comparing your house to comparable properties. No amount of clicking on internet sites can replace this experience.
Once I have evaluated your house versus the comps I will make adjustments for many variables (that matter to buyers looking for a house like yours), such as: living area square footage; lot size; number of bedrooms and baths; garage spaces; and location. After the adjustments are made most people stop and decide that this is what the price should be.
The last step is to position your house within the market. A house is worth what somebody will pay for it and what somebody will sell it for, we call that a “meeting of the minds”. So, it is important to know who is out there looking for a home like yours and who your competition will be. One useful market statistic is called the Absorption Rate. This compares the number of properties currently on the market with the number of properties sold within the last year in a given price point. If there are more properties than buyers it’s a buyer’s market and if there are more buyers than properties it’s a seller’s market (we like those).
Once this analysis is complete I will give you a price that I think a buyer will probably pay for your home in today’s market.
In summary, don’t chose your own price, leave that to a professional … Mike Hunter.