There is nothing that brings us more pride or gratification than exceeding the expectations of our sellers. In a seller’s market, those expectations can be exceptionally high, which is why we always advocate a reality-driven, market-based analysis when pricing your home. The goal is always rewarding results for the seller, within a well-strategized and functional framework given current market conditions. While it is easy to get wrapped up in the momentum of ‘How fast will it sell?’ and ‘How much can I ask?’, we encourage all sellers to understand these fact-based fundamentals first. In today’s blog, ‘Seller Series Edition 2’, we reveal 7 pricing principles that prevail in virtually any time and place. (If you missed 'Seller Series 1: Creating A Comprehensive Needs Analysis', click here.)
7 Pricing Principles For Sellers
1. Acquire An Accurate Assessment.
Countless online home estimate resources make property pricing accessible…but not accurate. According to the LA Times*, median error rates of a popular, automated search system are 8%-20% or higher, averaging nearly 12% in San Francisco last year. In addition, they do not account for your home’s current condition, your neighborhood’s pending comparables, or your region’s market conditions. Always get an agent analysis of your home’s value before making the decision to sell.
2. Don’t Presume A Dollar For Dollar ROI For Upgrades.
There is no doubt that appliance/fixture upgrades, interior/exterior improvements and exceptionally maintained properties are extremely attractive to buyers. However, these investments rarely provide a dollar for dollar return; spending $50,000 on a kitchen does not automatically result in a $50,000 price increase when listing your home. An experienced agent can guide you through which improvements will provide the highest return and which can actually deter or distract potential buyers (yes – there are some!).
3. Assign Value To Current & Future Surroundings.
The great thing about Silicon Valley…some successful company is always moving somewhere! If your home is next to Google’s next big campus, or across the street from the new Netflix expansion…your agent should account for that desirability in pricing your home. Also, be sure to include the proximity to parks, recreation, urban areas and school API scores in your valuation. ‘Location, location, location’ isn’t just a myth; it’s the reality of the lifestyle for the buyer who chooses your home.
4. Calculate Suggestions From Your Home Inspection.
Upfront home inspections are a necessity for an accurate assessment of your home’s value. Don’t wait until your buyer performs their inspection; avoid surprises and gain the opportunity to address the repairs. Any work required on the home can be used as buyer negotiating power and even extend the timeline of the sale.
5. Strategize Sensible Solutions.
Sometimes, a small investment can yield a large return – so simple solutions like paint, carpet and curb appeal additions often make the most ‘cents’ (pun intended!). Talk with your realtor about fixable features that make a decisive difference.
6. Note The Net Sheet.
The price that you list your home at is only one component of your proceeds. Be sure to calculate the cost of any needed/suggested improvements, agent fees, title costs, rent back value, etc. You’ll see that reviewing the resulting net sheet is the 2nd step of our seller services (click here); we believe in a thorough cost benefit analysis upfront so you know exactly what to anticipate along the way.
7. Address Compensating Factors.
Do you need to close in 14 days? Is your moving timeline extremely rigid? Will your home require unique marketing avenues? Have recent, local sales adversely impacted your value? Would it make more sense to accept a cash offer, even if it’s slightly lower? Every situation, just like every home, is different. If your position presents compensating factors, be sure to talk with your agent about how these items may impact your price, your counter offer or your buyer selection.
Bonus Basics:
- Make sure you understand all required disclosures in real property transactions as outlined by the California Department of Real Estate. Your real estate agent cannot provide legal advice, so be sure to speak with a real estate attorney if you are concerned about Federal or State compliance.
- Not every home will set a record…and that’s okay! It’s easy to get wrapped up in hoping to set a neighborhood record for the lowest days on market of highest price per square foot. But at the end of the day, the most important result is that you received the price you needed and the circumstances that made the sale a success for you. An integrity-driven agent will want the same, and shouldn’t pressure you into a quick sale if it means an ill-favored result.
- Get educated on DOM…but don’t get obsessed with it. Knowing the days on market (DOM) of homes in your price range, your size and your neighborhood is extremely helpful. But, be sure you are comparing apples to apples (listing to entering contract, or offer acceptance until transfer of deed?) and don’t assume minor deviations in anticipated days on market are a sign of trouble. Ask your agent for feedback on factors that may influence your timing and process.
Check back next week for ‘Seller Series Edition 3: Evaluating, Receiving & Negotiating Offers On Your Home’.
Warm regards,
Mark & Jason