Pricing a home for sale is NOT A PERFECT SCIENCE…
1. How Should I Decide What Price to List My Home?
When pricing your home, the best place to start is by looking at comparable sold listings in your neighborhood.
A Realtor who has access to this information directly from the MLS is your best source of this information and she/he will know how to take into account things
Deferred maintenance, remodeling and other aspects that could affect the price of the property. It is best to look for homes that match the square footage, lot size and condition of your property most closely.
However, other factors include: the interior & exterior condition of your home? Does it need updating? Are the major systems older and need replacing soon (A/C, roof, plumbing, electrical)? Is there a view? Landscaping and its maintenance? What direction does it face? And for condos, what floor is it on? What amenities does the building provide, if any? How much is the HOA? Does the bldg. have Earthquake insurance? Does it have A/C? Washer/Dryer inside the unit? Tandem or side-by-side parking? Extra storage?
All these factors are considerations when pricing a property and several more.
2. Can’t I just use a Zestimate from Zillow?
Zillow is not the best way to determine how much a home is worth. A computer algorithm cannot take into consideration all the unique features that a property may have such as: the direction your home faces, deferred maintenance, upgrades and remodeling, vicinity to schools, supermarkets, views, etc…
These estimates are usually off (up or down) by tens of thousands of dollars and can be VERY misleading to homeowners.
3. Why Can’t I just Price High and See What Happens?
When a home first comes on the market, the first two weeks are critical to its sell-ability.
This is when the home is a shiny new object and buyers are most excited and most likely to come see it.
Nowadays, the internet provides a lot of information to inform and educate buyers about average market prices in almost any neighborhood in Los Angeles. So when you start too high, many buyers won’t even bother making an appointment to see your listing or make an offer as they feel your price is too far apart from what they feel the property’s worth is.
In this seller’s market where the buyer’s demand is very high, combined with a strong advertising campaign (such as the Bron Realty Group does for all their listings), if the phone doesn’t ring much within the first week of putting the listing on the market and more importantly, if we do not start receiving offers within the first 10-14 days, then it is a definite sign that the high asking price is what is keeping your home from selling.
So then we lower the price, right?
Yes, but what we call the “Golden First Two Weeks” is not reproducible and the initial excitement will never be the same as what it would have been if you had price right to start with. The seller will agree to let the Realtor lower the price and once buyers see a price reduction they begin to wonder “What’s wrong with this house?”.
At this point, we may get some offers but the old “kick’em while they are down” mentality starts to factor-in and the seller will start receiving “lowball offers”.
Pricing at Market Value or Below
As previously mentioned, the first two weeks of a home coming on market are essential. This is when the excitement factor is at its highest.
While it may seem counter-intuitive at first, when a home is priced right (at market price or a little under) you encourage buyers to want to see the house and get them excited about the possibility of owning it. They even start thinking about how high they would be willing to pay to be able to get the home. This is how you get multiple offers and over your asking price.
In the end, not the owner, nor the Realtor, nor the appraiser know for sure how much your home is worth, The Market (meaning the buyers) the value of any home is really determines by how much it is worth but determining how much they are willing to pay for it. A seller can ask for 10 gazillion dollars but in the end, homes normally sell for what the market has determined its worth is, not what a seller thinks it’s worth and definitely not by how much the seller needs to clear from the sale.