The process, and perils, of pricing
One of the services we provide our seller clients is an in-depth analysis of what their house is worth. Every home is different and it is critical to both understand general market trends, as well as have a handle on how a property’s specific strengths and weaknesses will impact value. We typically have our first conversation about price with potential sellers at a pre-listing appointment. Sometimes, these meetings are with past clients or referrals who intend to list with us; other times they are competitive situations with the potential client interviewing more than one agent.
To understand current market trends, we research recent sales, looking at homes that are most comparable to the subject property. We also look at the current inventory of homes for sale, as they will be the new listing’s direct competition, and we assess how the home compares to other available properties. While this isn’t easy, it is at least the more quantitative, data driven, part of the process. The qualitative portion comes into play as we parse out how particular strengths and weaknesses will impact the list price. All four bedroom, 2.5 bath Colonials in Bethlehem schools, for example, are not worth the same amount – not by a long shot. A keen grasp of how potential buyers value style and age of home, neighborhood, exterior features, and interior condition is needed for drilling down to a more exact list price. This understanding comes from years of listing properties and showing buyers potential homes, and from carefully observing the fluctuations in the local market.
We strive to always provide potential clients with our opinion of the most accurate list price. We aren’t always right, and there have been times when we listed a house for a higher price than we ideally wanted, or where unanticipated market conditions have impacted the list price. But our goal is to tell our clients what they need to hear, which isn’t always the same as what they want to hear. It is ultimately a much better experience for all involved when a home is accurately priced, aggressively marketed, and under contract in a reasonable time frame. When listings linger on the market, and require multiple price reductions, we and our clients can feel a bit battered by the process.
But what happens when we are in a competitive situation and we know that the sellers are hoping to sell the house for more money than we honestly believe the home is worth? That’s when confidence in our pricing skills matter most. If we are sure a home won’t sell for close to what a seller wants, and we have looked at all of the available data, crunched the numbers, and they truly don’t line up with a seller’s hope, we tell them. Even if it means losing a listing, which it sometimes does. We would always prefer to get a new listing than not, but it’s more important to us to be honest with potential clients. I’d like to say that when we lose a listing we never look back, but there is schadenfreude in watching a listing we lost linger on the market only to ultimately sell at, or below, the price we recommended. We are only human after all.