We’re typically looking for three valid comparables we can substantiate to a bank appraiser. It is more difficult than some software algorithm would have you believe.
For example, in some communities such as Rochester, Birmingham, Royal Oak, Shelby Twp. and similar communities, you will find brand new homes, older homes, and some older homes that have been completely renovated and actually nicer than the brand new homes. Finding three comparable homes to guide us in determining value is sometimes difficult.
Let’s be honest, sometimes there are no comparables at all. In this case, your agent’s experience is crucial. The more homes an agent sells, the more reliable their advice.
Overpricing vs. Ambitious Pricing
Use caution, it is a very fine line. Overpricing a home in the face of good, solid comparables can make a seller appear out of touch with the market and unreasonable. Buyers are turned off by such properties.
Rely heavily on your agent to discuss with you the pros and cons of pricing your particular home. I am competitive, I like to be ambitious in my pricing, but there’s a fine line between ambitious and crazy.
Interpreting Current Market Trends
Agents do not control the market, but a good agent should be able to accurately interpret it for you.
Sometimes, it’s not great news. The best agents are the ones willing to tell you the truth about price, even if it is disappointing. You would think this is a given, but agents know that disappointing a seller can cost them the listing.
According to the National Association of Realtors, most sellers still hire an agent based on their suggested listing price. Please don’t be a statistic.
An agent who cares about your plans will sit down with you, explain the market whether up or down, and offer solid pricing advice with supporting comparables.
There’s no advantage to lingering on the market as an overpriced, over-exposed property with a long market history. Take a look at the “Expired Listings” list on the MLS. It is chock full of examples of what not to do.
How Much Should Allow for Negotiation?
Buyers expect to negotiate. While you might expect to shave a little off the list price, overly padding the price is old school and an ineffective strategy. I wrote extensively about padding your list price here.
Pricing Your Home Competitively Is The Best Strategy
Our team averages about 98.5% of list price. The MLS statistic is about 94% of list price. Interestingly, that is across all price points. The fact is, the longer a home is on the market, the lower the offers are. The best strategy to getting the most money for your home is to price it competitively and counter offers that are too low. Nobody can make you take less than you are willing.
Handling Low-Ball Offers
Don’t be afraid of “lowball” offers. If a buyer presents an offer lower than you are willing to entertain, the most effective response is to thank them kindly for their interest and decline, then wait for an offer that makes sense. I have seen dozens of buyers come up 5-10% in their offer amount after a decline.
Always counter. Sometimes, a buyer is fishing for the seller’s bottom-line (or following the advice of well-meaning parents) but is willing pay more.
Always counter and allow your agent to do their job in negotiating.
How Will I Know If My Home Is Overpriced?
Your agent should be able to read the market, and the market will surely inform you. You’ll have very few showings and the feedback from those showing should indicate it’s overpriced.
If I don’t have any showings in the first week your house is on the market, something is wrong. At the moment, I am averaging an offer in the first eight showings. If I don’t receive an offer by then, I review the market data to see if an adjustment is recommended.
Other Considerations by the Buyer
In addition to price, Buyers will be looking at the following criteria when searching for their home:
- Any remodeling or maintenance costs anticipated that they would incur over the next 5-10 years such as roof, furnace or special assessments.
- Recent sales on your street and in your neighborhood
- Recent sales of similar properties in nearby neighborhoods
- Other properties currently on the market
- Historical appreciation of your area over others
- School districts rating
- Age, square footage, quality of finishes and recent upgrades
- What is on the Master Plan in your neighborhood?
- Are there areas subject to rezoning?
- Is there projected commercial development?
- How is the commute?
- How are the roads?
- Is it expected to change in the short and medium terms?
Have questions about pricing your home?
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