When putting your home on the market, the second most important decision you will make is price. The first? Your Broker. But that's a different post.
The price you set must deliver maximum dollars to your bottom line (which also involves terms) without being so high as to scare buyers away. At the same time, the price must be able to support a professional appraisal. We call the right price 'Fair Market Value,' and rather than a dollar and cents price, we often express it as a range of value. Truth is, 'Fair Market Value' is what a ready, willing and able buyer is apt to spend on your house today, and that figure can vary a few thousand dollars in either direction depending on terms and whim.
The best clue we have about 'Fair Market Value' for any house at any specific time are the recent sales of similar properties. If five houses in the same neighborhood with the same floorplan and square footage have sold in the previous three months, their sale prices ought to give us a pretty clear indication of what a willing buyer would likely spend on your house. I wish doing a Market Analysis and evaluating comparable properties was always that easy!
Unfortunately, too often there are too few comparables in the previous three months. Sometimes we have to look at the previous six months and sometimes we have to go back a year to get sufficient data. Often the specific neighborhood has too few sales occurring of similar properties and we have to expand the search to neighboring areas. And sometimes, the property isn't in a neighborhood at all or is so unique that finding similar homes is very difficult.
At GreatNest Triad Properties and The Vincent Group, we are in the market every day and have been for years. Often it is our knowledge of what's going on and what's happened in the past that drives our recommendation on pricing. In addition to comparable sales, we consider price trends in the marketplace and factor those in. If you are in an area where prices are rising 1% a month, where the most recent sale was 3 months ago and where it's apt to be 2 months before a suitable buyer can be found for your property . . . well, there's a 5% price differential that must be taken into account!
It is important to go into the market with an initial price that is close to Fair Market Value because the first two weeks any home is on the market present the greatest opportunity for maximum exposure. At any moment there are dozens of potential buyers looking at homes in Greensboro, High Point, Winston Salem and throughout the Triad. Some may be looking for a home just like yours, and may have been looking for weeks or even months. It is this backlog of buyers we want to attract the day your home goes on the market. In a week or two, that pool will have seen your house, will have decided it was right for them or not, and you will be left with only the new buyers trickling into the market as prospects.
Overpricing with the idea that 'I can always come down,' is a foolish strategy for this very reason. That backlog pool of buyers will see your house and the high price and continue looking. A month of two down the road, when your frustration is at a peak, you may reduce your price back to where you should have started . . .but price reductions often create questions about a house. What's wrong with it? Is the seller becoming desperate?
There are online tools today that claim to help you determine Fair Market Value for your property. Most notable is Zillow's Zestimate of Value. I can't tell you how often we have met with home sellers who have an inflated idea about their home's value because of a Zestimate or worse, believe their home is worth less than our recommendation! Understand that with automated online tools, estimates of value are being made by a machine; one with no local market knowledge, no hands on inspection of property, no understanding of the nuances that can make one property worth more than another. To really understand the value of your home, to know the right price today, you need the help of a true professional, like those of us who are proud to call GreatNest home.
If you are thinking of selling or are just curious what your home is worth, please call us. We'll be happy to do the research and analysis, and to share a professional opinion with you. It's free. Click here to get your no-obligation Market Analysis.