REAL Tips

Price Your House to Sell

Want to get the most money for your home? Think that means put a nice big price tag on it?

Think again.

If you want your house to sell, you have to price it for current market conditions, period. Not for what you hope you can sell it for, not what a neighbor sold theirs for, not even for what you paid for it, a few years ago in a hotter market.

Hard words, but true, so true.

Pricing a house to sell means extensive market analysis, including a very current review of the houses for sale in your area, and the houses that have most recently sold in your area that are similar to yours. This may need to go well beyond the listing presentations the agents vying for your listing brought you – after all, they were trying to woo you with a proposal that would get them the listing. If one of those agents differed greatly from the others, you need to ask yourself: why?

Why is pricing it right to begin with so important, you may ask? If it doesn’t sell at the initial (higher) price, you can always drop it in a few months, right?

Well, you can. You shouldn’t.

Most listings see the greatest amount of traffic within the first few weeks. After 2 to 3 weeks, fewer and fewer people will be stopping to by to visit. If the house is priced right, it should go under contract. If it isn’t priced right, it won’t. If they saw it in the first round, they may not come back later when you drop the price. If it sits too long, and the “Active Days on the Market” climbs into multiple months, people really do start to wonder, “What’s wrong with it”? Even if you later drop the price, sometimes substantially, you already have the deck stacked against your property and it is likely to sell for less than it would have had it been priced right to begin with. Analysis of large swaths of data reveal this trend quite readily. Do you want to be the person who decided to test it again?

How do you price it right the first time? You have to run the numbers, and you have to set aside your personal attachments and be realistic about how your house compares to the others for sale, or that have recently sold in your neighborhood, or local market area.

Some of the important elements to consider, when determining the right price to sell your house:

• How many houses have sold in the last 6 months in the area?
• How many are currently for sale?

If 12 have sold, and there are currently 12 houses for sale, you have 6 months of inventory. You should expect about two houses to sell each month. Yes, this varies by season, but I need to illustrate a point: if there are 12 for sale, and two are likely to sell in the next month, do you want your house to be the highest priced one, or one of the ones that actually gets sold? This is called the absorption rate and should be used when determining how to price a property relative to the competition.

Other things you (and your agent) must also evaluate:

• How does your home compare to the competition?
• Is it bigger, smaller? Is the lot average? On a golf course? Near commercial property, or areas with a lot of (unwanted) activity?

Simply taking the average price per square foot for the area, and multiplying it by the size of your house is a mistake when determining the price that has the best chance of getting your house SOLD! Your agent should also take into consideration items listed above, as well as a whole host of other things, including: landscaping, garage space, bedrooms (typical, or more/less than typical?), condition, age, architecture, quality of construction, and so on. And of course, Location, Location, Location! Busy streets matter, as does proximity to public transportation in some areas (good in some, maybe not so good in others). When recommending a listing price, your agent should be able to show you that they did their homework and can substantiate their assertions with data, examples, well-presented analysis and solid reasoning.

You may be tempted to glaze over when presented with this much information, but please hang in there. Your home is one of the most substantial assets you may ever own, and selling it will be a lot less stressful if it doesn’t languish on the market.

If you are in an area where properties are highly variable (in lot size, type/age of home, amenities), you may want to have a professional appraisal performed. Professional appraisals differ from most agents’ Competitive Market Analysis (or CMA, part of a typical listing presentation) in a myriad of ways. Appraisers appraise homes: they are not trying to sell them. Appraisers must be unbiased, and the professional standards, including licensing standards and ethical standards are substantial. In Texas, Appraisers must prove extensive experience, under the direct supervision (sponsorship) of another licensed appraiser, take a pile of classes, and a comprehensive exam prior to receiving their license. This gauntlet also includes broad undergraduate class requirements and an oral examination/interview by TALCB (Texas Appraiser Licensing and Certification Board).

For the sake of full disclosure, my husband is a Texas Certified Residential Appraiser and we do talk about the standards for determining value on a frequent basis. His company, Appraisal IQ, appraises property in 5 counties in Central Texas, including Travis, Williamson, Hays, Caldwell and Bastrop. If at some point you order an appraisal from him, please keep in mind that you can’t also be a client – past, present, or future – of mine because that would be a conflict of interest. Appraisers must be able to provide an unbiased opinion of value, or the appraisal will fail to meet the applicable professional and legal standards.

In the course of my professional training, I completed the Appraiser Trainee courses, some of the Texas Appraiser licensing pre-requisites. Although the CMAs I prepare for clients aren’t appraisals, and can’t be regarded as such, this training has most certainly honed my analytical skills, and comes in handy when contemplating the options for recommending the listing price for a property that is about to go on the market.

Price Your Home to Sell and Get it SOLD!

In a subsequent post I will discuss some of the other things you need to pay attention to in the weeks (or months) prior to listing your house, including options for updating, remodeling and staging, all of which can help position your house to beat the competition.

After all, once you sell your current house, you can find the next one that you will then call HOME.