By Dian Hymer
A listing that's priced right is one that will sell within a reasonable period of time for the highest price the market will bear. Determining the right price, however, is not an exact science. It depends on the character of your local housing market as well as constantly changing market conditions.
Homes in tract developments can be relatively easy to price because there is standardization in the housing stock. However, in neighborhoods where no two houses are alike, pricing is more subjective and depends on an intimate knowledge of the factors affecting local market value.
Even when there is uniformity, variables like location within a development will affect market value. For example, if your home is on a street at the edge of the development that backs up to a busy highway, it will probably sell for less than a home located at the middle of the neighborhood on a quiet cul-de-sac.
Maintaining objectivity is difficult for most sellers. After years of owning their home, sellers often lose sight of the features they objected to when the bought the home. Too many stairs to the front door or lack of a family room off the kitchen might be glaring to new buyers. These factors need to be taken into account when you select a list price.
Home Seller Tip: Be sure to hire a real estate agent who has a lot of experience working in your local market. He or she can educate you about the esoteric factors that will affect the selling price of your home. Your agent should provide you with comparable sales information and suggest an approximate selling price range for your home.
The next step is to determine what pricing strategy to use. To help you decide, find out how long it's taking to sell listings similar to your home. You also need to know how close, on average, the sale price is to the list price. If listings are selling within a month for 98 percent or more of the list price, you're probably in a seller's market.
In a seller's market, selecting a price that is at the low end of the expected selling price range may result in multiple offers. Multiple offers tend to drive the selling price up.
If you choose a pricing-low strategy, make sure that the property is adequately exposed to the market before you entertain offers. Typically, sellers using this approach wait 10 days to two weeks, during which time there is a broker open house and one or two public open houses. Without this exposure, your home could sell at the low end of the range because a limited number of buyers will have seen the property.
Not everyone feels comfortable pricing low and letting the market bid the price up. Another tactic is to select a price at the high end of the expected selling price range. With this approach, you might want to hear offers whenever they are written rather than setting a date certain for listening to offers.
This pricing strategy can backfire if you set a higher list price and decide to wait to hear offers. This sends a message to buyers that you want a higher price. If buyers think you have unrealistic price expectations, you could find yourself with no offers at the end of the waiting period. In this case, you might have to reduce your price to generate an offer.
The Closing: In a buyer's market, where prices are soft or declining, selecting a list price that's lower than the prices your competitors are asking is the best way to attract offers.
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