Experienced REALTORS® will tell you it’s critical to price a property appropriately from the get-go. Research shows overpricing a home and then dropping the price several times often leads to a final selling price that’s less than what you originally should have asked. In fact, the longer a property stays on the market, the lower the eventual selling price is likely to be.
Naturally, sellers want to sell their property based on what they paid for it and definitely for enough to cover their mortgage balance. The truth, however, is that the house is only worth what the market says it’s worth. If the price is too high, potential buyers might not even look at it. On the other hand, if the listing price is below market, the property will sell quickly, but for less than it could have.
Just ask Todd McGee, a broker with Charlottesville’s Nest Realty. He’s helped many folks set well-gauged listing prices. His advice? “I would tell people that next to selecting their real estate professional, setting an accurate list price is the most important thing you do when it’s time to sell.”
He points out the listing price must reflect today’s market, not what the house was worth last year or what the sellers “need” to get out of the property. “It’s really important to take into account similar properties sold in last six months and also your active competition,” he declares. “Overpricing your property will enable similar, right-priced houses on the market to sell first.”
Some people scout out websites such as Zillow or Trulia. While these give a general range of prices, histories, and even tax bills for a specific property, they include properties not currently on the market and there is no guarantee of accuracy. Besides, McGee observes, no computer-based algorithm can replace the experience of a real estate professional who has actually been inside similar places in the last six months and knows local neighborhoods.
“Zillow, for instance, doesn’t take into account what might be next door or across the street,” he points out. There’s a lot of difference in being adjacent to a boarding kennel or daycare center or being next to a greenspace or golf course.
He does mention Realtor.com as a good site with listings of properties currently on the market. The searchable website has filters for zip code, type of home (condo, single family), the number of bedrooms, baths, stories, and other features like a garage, or fireplace.
Comparative Market Analysis
The best tool for determining a listing price is a comparative market analysis (CMA) of recently sold properties. These properties should be similar in terms of number of bedrooms, square footage, school district, age, improvements, and other amenities such as a garage, basement, or fireplace.
It’s seldom possible to find a twin to the property being sold, of course, but the CMA will give a range of prices. Other considerations are similar properties currently on the market, how long various properties were on the market before selling, whether properties have been withdrawn because they didn’t sell, and the difference between the original listing price and the eventual selling price of the properties. (McGee reports that last year, most listings our region sold within about three percent of the listing price.)
People usually receive CMAs from REALTORS ®. “Usually it’s good to talk to a couple different agents from different companies,” suggests McGee. “Different agencies might offer different services. Let the agents know what your specific goal is. For example, do you need to sell the house within a month? The need to move fast is a factor that will impact price and marketing strategy.”
He also says agents won’t be upset that you are consulting with others. “Agents know it’s a job interview,” he says. “You have to realize that different professionals will have different ideas. On might say you should do these five things to get ready to sell while another might say do nothing. You have to trust your relationship with the person you choose.”
McGee also suggests sellers ask questions when meeting with real estate professionals. Questions might include: What concessions are buyers are asking for, such as helping with closing costs, leaving appliances, or giving an allowance to replace carpeting? Have you sold properties in our neighborhood? Should we do a home inspection before listing?
“A lot of our job is managing sellers’ expectations,” concludes McGee. “If we can inform about how it will go, it will be a smoother transaction. And setting a realistic listing price can make all the difference.”
By Marilyn Pribus
Marilyn Pribus, formerly a real estate agent in Newport News, lives with her husband and their new CASPCA shelter dog in Albemarle County near Charlottesville.