Real Estate: The Art of Pricing a Home

Not too long ago a “friend” told me she wished she had my job because it’s the easiest job in the world. All I have to do is staple some papers together for an open house and I’m done – if only! The hardest part of the job is being hired and listing at the right price. We use a team approach to list a property. After we have made an initial visit to a property we each do a separate analysis. If we’ve picked the same comps, great if not, we then hash out why we picked a certain comp and why we think it is or isn’t a good comp. The best and easiest comps are very similar houses right in the same neighborhood. That sounds easier than it is. In a city like Newton, our housing supply is older and our villages are diverse. Some homes are renovated very recently, some have been renovated badly.

Newton isn’t a high-rise condo-building-with-same-floor-plan-and-square-footage kind of town.

I am a firm believer in numbers. As someone I worked with on Wall Street once said to me, “the numbers are your friend, they don’t lie.” The average price per square foot is an absolute starting point to come up with the right price. If my analysis has the pricing way off base I need to figure out why. If done correctly a pattern emerges; renovated well, on a quiet side street and a large lot will comp out to the highest price per square foot. Busy streets sell for less money. Small lots, garage or no garage, walkable to anything…ALL of these factors affect the price.

 

The biggest obstacle can be the sellers themselves. We understand that a home is likely to be one of the largest assets of a home seller. When we share the listing presentation with a seller we can immediately tell if a seller “likes” the price. Generally, once we go over the comparables in detail and the seller understands the numbers, they get it. Occasionally, there is no convincing a seller that the price in their mind is not attainable.

Overpriced homes quickly stagnate, there will be a slow drip of scant curiosity and a painful discussion to reposition the house to attract/re-attract buyers. Properties get the most attention in the first two weeks of market exposure. During that time period, buyers have a “What do I have to do to get that house?!” mentality. By the third week, buyers are thinking, “What can I get that house for.” 

Ultimately, pricing relies on more than data analysis. It is entrenched in human psychology, that buyers of anything want to see a perception of value. If you hit the sweet spot they respond. We don’t suggest underpricing but the days of pricing to negotiate have been over for years. An overpriced house sells the competition.

The highest form of Real Estate Art is to set a price where both the buyer and the seller feel rewarded.

This guest post contributed by:

Margaret Szerlip

Compass

Email:  margaret@compass.com Mobile:  617.921.6860

Copyright © 2017 · All Rights Reserved · LiveNewton.net

Author: Margaret Szerlip

Share This Post On

Submit a Comment

Your email address will not be published. Required fields are marked *

Share This