I’ve found in this market taking a more methodical or statistical approach to selling works better for the clients I represent. We all wish we had a crystal ball to use in making such decisions as selling a home. The truth is, we actually have something better, statistics. If your agent closely monitors trends happening now and historically, they can give you a pretty accurate idea of what’s going to happen, if you’ll listen of course.
Before you put your home on the market, pricing is always the biggest discussion. We already know you don’t want to “give it away” nor do we want you to. It’s extremely important to separate the emotion of seeing or hearing a price that you aren’t expecting and the reality of what it’s going to take to get the job done. There’s not an agent in business today that wouldn’t love to sell your home for more! Pricing your home to SELL in today’s market simply means being ultra competitive, that doesn’t mean you’re “giving it away.”
So here are the 7 things you should find out from your agent before settling on a price.
1. The actual number of homes that are selling in your area. Whether it’s your specific subdivision or zip code or county. Whatever radius makes sense in comparison to your home. It’s so easy to get an opinion from an inactive agent or a friend or neighbor with limited information that’s completely off and not reality based. Too often I will call a seller whose listing has expired and hear “nothing is selling, it’s not a good time.” I always ask where they got that information. Usually it’s from a limited source. Recently a seller said to me the market was “dead.” When I told him how many homes actually did sell while he was on the market in his own subdivision he was astonished. His perception was completely off. Make your decisions with actual numbers, not perceptions or opinions. Especially when they’re easy to get like this data is.
2. Understand the meaning of days on market. Pay close attention to the homes in your area that sell quickly. What did they do differently? Chances are, it’s pricing right from the beginning. I would bet an agent in your market can show you pages of homes that eventually sold after years on the market and multiple price reductions costing them thousands of dollars. Without exception, homes that take longer to sell start much higher, have multiple price reductions and finally sell for WAY less than they should have. Using the same strategy those sellers did will only get you the same result.
3. There are some basic statistics that every agent should know and provide to help you price your home effectively. These are:
a. How many properties are currently for sale?
b. How many sell each month?
c. How many months of inventory does your area have?
d. How many new listings enter the market each month?
e. What percentage of homes listed are distressed sales?
f. What percentage of homes SOLD are distressed sales?
g. What month of the year do the most homes get listed?
h. What month do most homes sell?
Your agent should be able to provide this information and how each answer affects the sale of your home.
4. You should be aware of the foreclosure activity relative to your home. How many foreclosed homes are currently listed that will be your direct competition and how many recently sold? Be aware that in a normal market an appraiser is not permitted to use a distress sale as a comparable because it’s considered “abnormal circumstances.” Not so true today. Appraisers are not required to use these comparables, yet in some cases can’t avoid using them either. When your agent provides you with this data, please know the appraisers have the same information. Even if a buyer is found who is willing to pay more for the home, the appraisal could stop the deal in its tracks. These homes are your competition. Not only in the selection process of a buyer, but in the lending/appraisal process as well. You can’t ignore them.
5. Have a good understanding of what’s called “search psychology.” There is a method to the madness of the search for homes for sale. If you price your home at $359,000, there’s a good chance a buyer won’t find it. A buyer is more likely to search for “easy” numbers. They’ll do a search up to $350,000 and never even see your home. On the other hand, if a buyer is looking for a home from $350,000 to $375,000 and your home comes up, you need to be very clear what else is coming up on that search. If there are 15 choices and the other homes have more features or benefits, you won’t even make the list. When your agent recommends $349,000, trying to squeeze out that extra $10,000 could cost you well more than that in the end!
6. Understand these conversations are ANYTHING but easy for us. When I got into real estate I never pictured having sellers cry, scream, hang up, knock over chairs because of my listing presentation. I have two options on a listing presentation. I can tell you what you want to hear, and get no results 6 months later. Or, I can take the chance of upsetting you by delivering the truth, and actually get your home sold. I always choose the second option and it has cost me listings, but I won’t lie just to make you happy. If you meet with 2 or 3 agents generally one is going to suggest a price that is really too high and won’t get the home sold. Remember the adage…If it sounds too good to be true, it probably is. Unless the agent with the high price is offering gold bars to the buyer, it’s not going to sell for higher than the comps show.
7. Have your agent give you a very CLEAR picture of exactly what’s happening and how long the recovery will take. In case you were thinking this…IT’S NOT GOING TO BE BETTER IN 6, 12, 18 or even 24 MONTHS. (At least in my market) Time is not your friend right now. If you need to sell, waiting will cost you money. If you decide to “wait it out” understand it’s not going to be fast. Right now in my area there is a 25 month supply of homes for sale. That means if there wasn’t another home listed it would take 25 months to sell everything currently for sale. Well, guess what…each month we have about 300 new listings. Explain to me how waiting is going to help you? In many areas you need to be prepared for 5 to 7 or more years if you want to get more for the home than it can get today.
Selecting the right agent is critically important. Selecting the right price is even more so. Find an agent who will give you this information, then take their suggestion. You’ll be very happy you did as you watch the SOLD sign from the rearview mirror of the moving truck!
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