Properties listed at the right price sell fastest and put the most money into their sellers’ pockets. Under–pricing, isn’t common, but can cost you money you really need to move on in life. Over–pricing is a really bad practice that can keep a property on the market longer than necessary and end up with price reductions and low–ball offers.
What would an upward or lower price adjustment look like based on the current market CMA? Well, let’s look at an example. Let’s say that the CMA of previously and recently sold similar homes shows that the listing price should be around $235,000. However, those sales were between one month and three months old. Our current market listing CMA shows that similar homes in the neighborhood are listed at $249,000 or thereabouts. You and I may decide that the market is improving and justifies raising the listing price of your home to $245,000 so that it’s still competitive but a better deal for you. Of course, this can work the other way as well.
A proper list price that reflects current and realistic market conditions is critical to getting your property sold quickly. I don’t want you to under–price, but it’s worse to over–price in any market. Buyers tend to discount value by DOM, Days On Market. The longer a home stays on the market, the greater the likelihood that they’ll discount their offers. So, a realistic list price is how I make sure your property sells without languishing on the market.
How do I come up with a suggested list price that reflects your home’s competitive position? It’s a combination of services and experience, and I’m going to be very careful and detailed in my analysis and market evaluations to make sure that you don’t leave money on the table or sit around wondering why you aren’t getting offers.
My evaluation of how your property compares to the current competition is the first step. Then we may suggest some worthwhile corrections you can make to improve that position. Once I know what your home will look like when listed, I’ll go into our thorough CMA, Comparative Market Analysis, process.
CMA of Sold Properties
First I select comparable properties out of those sold recently and in the neighborhood or nearby. These comparables or “comps” are selected based on similarity in features, location and characteristics with your home. They must have been sold as recently as possible so the sold prices are of maximum value.
I then do a thorough “adjustment” process to adjust their sold prices for any differences with your property. If a home has one more bedroom than yours, I would adjust that property’s sold price downward for the value of one bedroom to make the comparison “apples to apples.” I make adjustments for garages, bathrooms and other major features to bring our comps to closely compare with your home. Then I use those sold prices to arrive at a preliminary listing price for your home.
I say “preliminary” because I have another CMA step.
CMA of Current Listings
Now I get more comps, but instead they’re properties currently listed and your competition. I go through the same adjustment process, and I come up with another, possibly higher or lower, price suggestion for your home. This second CMA gives me more up–to–date information about the market which could cause us to lower or raise our preliminary list price to adjust to the current market. Using the two CMA results and an experienced analysis of your home’s position in the marketplace, we can set a listing price that will get the job done.