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How many times have you looked at homes for sale and wondered what the Realtor was thinking with that list price? Maybe you think it is too high? I mean… it can’t really be worth that….Can it? Maybe sometimes you think it is too low… I mean what was that Realtor thinking pricing it there? I am sure though that sometimes, you wonder where Realtors are getting their information from! Many people will pull up zillow and think their home is worth more than that, or maybe they are surprised that their home is worth that much. Don’t trust either number from zillow. Honestly though, sometimes a home is worth more than zillow states, and sometimes, yes sometimes, it is less. Zillow is great for maps, and it is great to get an ‘idea’, but it is still just a computer and computers don’t take into account all the information like a person does. For example, zillow has my home as 1 bedroom and 3.5 baths… I can tell you that both numbers are wrong….LOL. At the end of the day though, the homeowner/seller always has the last word on the listed price of a home for sale. A Realtor can only advise, and assist
So, how does a Realtor come up with pricing for a home?
As a Realtor, when we sit down with a home owner who is thinking about selling their home, we are going to present ‘comparable’ homes as support for what we think the home should be listed for. Every Realtor will present this a bit differently as some Realtors will have a slick portfolio, some will have booklets, and some will have computer generated reports, and some will go ‘old school’ and crunch the numbers themselves. In the end though, this is a 3 part process….
1 – what other homes (if any) are actively for sale? These homes are competition. How does your home compare to it? …. but what are ‘comparable homes though? Same school district? School districts can really differ on desirability, and desirability of the school affects the home value. Close to year built? For example; a home built in 1985 is not really comparable to a home built in 2015, is it? But a home built in 2009, could be more comparable. What about if the older home has been remodeled, and the newer had not upgrades? Square feet? A home at 1100 sq ft is not really comparable to a home at 2000 sq ft, is it? …or isn’t it? How about one story homes vs two story homes? Did you know that one of those sells at a higher square footage than the other? That they appeal to two different demographics? What about garages? Let’s throw that in there to spice it up too. Are there sheds? Location? It could be an identical home but, but if there are other comparable homes closer… that comp might not be as comparable as you think. Zillow doesn’t take any of these things into account, and neither does computer generated reports.
2 – What homes are pending? So now we add in pending sale homes. So we take everything from above and apply that to the homes that are currently pending contract to close, and add in agent remarks, how long were they on the market for, and at what price.
3 – Let’s juggle a bit, because that is always fun… We take 1, add in 2, and add in the homes that have sold in the last 3 months. If we don’t have at least 3 homes, maybe we will go 4 – 5 months. The current market is changing so rapidly that anything past 6 months is outdated and quite unusable. But wait! There’s more… we need to look at what the home went pending for & what it sold for. Were there any repairs? Seller concessions? Changes? Sale fails? Length of time between active & pending? Length of time between pending and sold? How much were they pending at square feet? How much did they sell for at square feet?
There is so much more to ‘pricing a home for sale’ that just, “Hey! My neighbor sold for XX amount, and my house is better than that… because zillow told me it is XXX amount”. To quote one of my favorite Broadway Plays here, “Awesome! Wow! What comes next?”
Before we even go over the comparable to your home, we are going to take a walk with you around your home. To be fair, we are not judging you, but we are judging your home. An experienced Realtor has probably been in a lot of the homes that we are using as comparable homes, and honestly, some of us have probably sold a few of the comparable homes. So, we are comparing your homes condition to those active, pending, & sold homes. After looking at the above mentioned Items 1-2-3, we have a price range in mind, and depending on how your home compares to those others is where we are going to advise you to list your home at.
So what are we looking at?
No matter what HGTV tells you… we are not looking at your family pictures, etc. I’ve never, in my 17 years as a licensed Realtor, had a buyer tell me, “Oh boy, I really wish the sellers had taken their pictures off the wall. I just can’t picture myself in this home since it looks so much like theirs”. NOT ONCE have I ever had a buyer say that, and my friends, I sell about 50+ homes a year. What I have heard though is, “This home feels cold… like an apartment… there is just no personality here”, or “I LOVE their style. This home is SO CUTE!”, or “I love the location & the floor plan. I can’t wait to do A, B, or C to this home and make it mine.” It is a fine line between your home being warm and cozy feeling to ‘ugh… it is just so bland’.
Now.. there is too much of a good thing, but honestly, when looking at your home with you, I am looking at items that we need to deal with prior to going on the market that could be a hassle or a red flag during showings &/or inspections. I am looking at, and for deferred maintenance. I am looking for things that could get called out during an appraisal. I am looking at, for items that could be a turn off to buyers. I am looking at your home as I would as if I was walking through with a buyer. What would I point out?
I am also looking at quick, easy, and yes, cheap things we can do to ‘spruce’ up your home for showings to get you more offers, and more money. Sometimes, some homes need more than others, but not everyone has the funds to do that. Unfortunately, there will be those who always advise more, and more, and while that is great (and yes, would help tremendously), it is not always something that is possible, so let’s see what can be done, and DON’T feel bad about what you can’t do. Let’s focus on the positive and work on what we can do.
After we have walked around your home, and talked about your situation, we are going to go over Items 1-2-3, and talk about what where your home falls in that range. Let’s talk about your needs? Where are you going? Are you staying local? Are you moving out of the area? What do you need? What time are you looking at?
Let’s talk about your future buyers, and who is most likely to buy your home. Let’s talk about how we are going to reach those buyers. Let’s talk about marketing. Yes, we still need to market your home….even in this market. I have a sellers guide that I am happy to share that talks more about that….feel free to email me at firstname.lastname@example.org for that.
Selling a home is SO MUCH more than just sticking a sign in the yard. I wish it was that easy, and even in this crazy market…. it really is not. Selling a home is pricing correctly, and there is a psychology behind that, especially in this market. It is about time of year you are listing your home because, believe me, there really is a difference in that! Sometimes we list the home for what the numbers tell us, and it goes crazy, and sometimes…. well, sometimes it does the opposite. You are not looking to sell to everyone. You just need ONE GOOD , STRONG offer by a buyer who loves your home as much as you do. I know … I know… everyone loves the idea of multiple offers…. until you have to choose one. So how do you choose the best offer if you have multiple offers? Well, my friends, that is a story for a different day!
So, last thing… whether buying or selling, one thing to remember is that not all Realtors are created the same. There are some questions you should be asking Realtors, and Lenders too. For more on that, please feel free to read about it on the blog section of the www.LearningToBuyAHome.com or www.FreeSellerClasses.com website.
As always, “may the odds ever be in your favor” I am here for any questions, and always available to help you with your next Home Adventure… Whether you are buying, or selling… I got you Boo!
Have a great day, and I will talk to you soon,