When putting a house on the market, which prices do you think would be more important to pricing the new listing: the properties that have sold recently or the ones that are listed but not sold? Many people don't distinguish the difference. Let's look at the two categories and determine their value to pricing your home.
The first category is the homes similar to yours that have sold recently. A good listing price is a price that a ready, willing, and able buyer will pay for the house. To find that price, agents check the homes that have sold recently. The recently sold homes are proof positive that someone was willing to pay that price. Other factors are gathered about the homes that sold: how similar they are in size, rooms, amenities, condition, and how long it took to sell the home. All of these things are considered when pricing a new listing.
The second category is the similar homes that are on the market currently but have not sold. This is the competition for the buyers in your market. Active listings can reveal important information as well. If the listing has been on the market a long time and has not sold, it probably is too high priced as compared to others for size, rooms, amenities, condition, and willingness of the seller to give concessions. It is important that your home be priced favorably as compared to the others in order to attract the buyers to your house.
In other words, if there are 39 homes on the market, you don't want to be the highest priced house. Agents usually only show about 10-20 homes before a buyer finds the one they want. If there are 38 homes with better prices than yours, chances are the agents will start with the lower priced homes first. Making your home the highest priced lengthens your market time.
When one is tempted to tell the listing agent, "But Bob down the street is asking $$$ for his house and it's just like mine, but mine's nicer", remember Bob can ask whatever he wants for his house. That doesn't mean he will get a buyer. Your listing agent's goal is the same as yours, to sell your house and get paid. Overpricing the home will not get it sold. It will only lengthen the time the property has to be on the market.
Thanks for the comments, Geno. It is interesting how different agents deal with the pricing issue. The methods are as varied as our personalities!
Posted by: Bonnie Erickson | December 04, 2006 at 12:09 PM
Bonnie, I love reading how agents in different markets handle the same objections and similar challenges. I'm paraphrasing the following but this is what I'm constantly hearing down here in Chicago:
CLIENT: But Mr___ ___ down the street just paid $___ for a house just like mine.
AGENT: Unfortunately, Mr___ ____,
already has a house just like yours. I don't believe he's in the market for another.
On the other side of the coin:
BUYERS AGENT: The condo next door
only sold for $___ a few months ago.
LISTING AGENT: Great. Go knock on his door and see if he'll sell it now for that price.
Anyway, I like your site.
Posted by: geno petro | December 02, 2006 at 10:53 PM