Pricing Your Listings to Sell

What is the most important element in listing houses?

It depends on why you are taking a listing.

If you just want to have listings, it doesn’t matter what the most important element is.

But if you want to make sales, the most important element is getting them priced to sell. Some will say there are other important element, especially those who say that the most important phrase in real estate is: “Location, Location, Location.” I think will all believe it is “Location, Price, Condition”.

To prove that price is the most important, let’s look at each of the other elements in relation to price.

Location
You no you can’t change the location of a home that backs to an interstate highway. Let’s say that homes in a more desirable (and quiet) areas of the subdivision are selling for $275,000. Would the house backing to the interstate sell for $275,000. Doubtful. What about $269,000. Still doubtful. What about $249,000. Maybe. What about $199,00. Of course!

No matter what the location, price it right and it will sell.

Condition

Sure, we all want a listing that has been staged and in top showing condition. Let me tell you about a listing call I went on several years ago. The home was in a starter home subdivision where homes were average at best. I walked in the front door and said “Wow!” The living room was freshly painted. The carpet was new and clean. The only furniture was a grand piano. I was impressed. When I saw the rest of the home my opinion changed. It was nasty dirty. There were clothing piled high in front of the chest of drawers in the master bedroom. So wide and so high that you couldn’t reach any of the drawers! We talked about the pricing and they agreed to list the house about $10,000 below value in the area, but said it would take them a week to get the home ready to show. So I took a listing dated a week later. I walked out knowing that they would not be ready in a week. But I also knew that my broker bought investment properties. He went over a couple of days later and bought it. I remember it well since it was the only listing I have ever sold in negative 4 days on the market!

No matter what the condition is, price it right and it will sell!

So now that we have established that pricing is the home right is the most important element, how exactly do you insure that a home is “priced to sell”? No matter what your market is like, you do it by doing a good CMA on the property.

Here are a few guidelines:

#1. Do not use the quick and easy “Price per square foot” method. The price per square foot method does not take into consideration the features that one home has and another home doesn’t have. The price per square foot method does not take into consideration the condition that one house is in and the condition another house is in. When I move home in 1997, I was surprised to realize that the “price per square foot” was the pricing that most people used. The best pricing method is comparing homes feature by feature and make adjustments to each comparable home to make it match the subject property.

#2. Base you pricing on recently sold properties.

#3. If your MLS tells you what method of financing was used on your sold data, only use properties that were purchased using a loan. That way you know that an appraisal was done.

#4. Use only properties that have sold within the last 6 months, as they best reflect the current market in your area.

#5. Try to find properties in the same subdivision or general area. If at all possible, use homes that are the same floor plan as the subject property and with a similar square footage.

#6. Do not select the properties you are using based on the price the seller has told you they want to list the home for, but select properties that are the closest match as possible no matter what the price.

#7. Use properties that are a similar age to the subject property. How similar will be based on your market area. My first marketing area was a fast growing market and it was usually easy to find comparable properties that were no more than two or three years older or newer than the subject property. My current market is in a “small city” with a population of approximately 35,000. Sometimes the only sales to be found could be 10 years older or newer than the subject property.

#8. Only use active listing to show their competition.

#9. Before you list a house at any price, be sure to consider the seller’s motivation for selling. For example, if the home is about to be foreclosed on you will want to price the house as low as possible. On the other hand, if the seller just wants to “test the market”, you may not even want to take the listing.

#10. Give yourself plenty of time to do a detailed CMA. If you are rushed, you will not be properly prepared to make sure you have given the sellers the information they need to make the informed decisions about pricing their home for sale.

If you remember these basic guidelines each time you are working up a CMA, no matter what your market is like, no matter what price range you work in, you will be rewarded with listings that will sell better. Good luck with your listings.

The author of this article is Linda Grissette. Some of you may remember her as Linda Grayson. Linda is a Broker-Associate with River City Real Estate. She is also the company trainer. Learn more about how River City Real Estate can help you make more money...even in today's market...browse through this site.

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