Agents must be part mathematician, psychologist and artist to price a home to sell. Pricing is crucial since it makes or breaks deals: too high and you risk smaller buyers’ pools and longer stays on the market, too low and buyers might suspect there’s something wrong with a property and offer an even lower bid.
To find that sweet spot, run through the following strategies:
✓Dive into the data. A comparative market analysis will encompass recently sold homes, active listings and pending sales in an area. The process starts with a home walk-through and analysis. Suggest sellers hire an inspector to assess their home’s major systems. Showing photos and figures at listing appointments helps sellers understand why their often-inflated estimate isn't in their best interests. By talking through the comps, you can jointly decide on a price.
✓Square foot pricing. No comparable homes? Choose a few properties as similar as possible to the seller’s. Add up the total square feet and divide by the number of homes for the average per square footage. Next, for the average selling price, add selling prices and divide by the number of homes. Finally, to get the average price per square foot, divide the average selling price by the average per square footage. Finally, multiply the average price per square foot by your home’s square footage to get a price point.
Do you know how to price your real estate listings to sell?
✓The “just below” method. Research shows pricing just under a round number can garner sellers more money, so at $999,900 versus $1 million. The difference signals a bargain. One study on sales in Hampton Roads, Va. found “just below” sellers got on average 2 percent more.
✓ Remember “range searchers”. Most buyers will say they want a home for under a specific round number, say $500,000. A home priced at $505,000 misses out on a swath of potential buyers. Be mindful of these “range searchers” when price setting.
✓Employ “price banding.” Look at the neighborhood inventory and take advantage of a pricing gap. For example, if five homes are at $475,000-$477,000 and four start at $490,000, price in the $480,000 band. For a look at your local inventory, use the KW Mobile App.
No matter your strategy, to set realistic expectations and save time, always form a contingency plan in case the property doesn’t go for the suggested price. If it hasn’t sold in 30 days, what price reduction will you recommend? Here is what Mark Spain of The Spain Team in Atlanta, Ga., showed Family Reunion attendees they need to do to make sure another listing doesn’t go unsold.