Pricing to obtain the highest selling price possible depends on an unbiased analysis of the comparable sales data for your neighborhood. Although tempting, it usually doesn’t make sense to select a list price for your home based on the one stupendous sale in your neighborhood.
Recently a home sold in the desirable Crocker Highlands neighborhood in Oakland, Calif., for a precedent-setting price. The house was listed at a reasonable price, taking into account that it lacked a garage. But, nonetheless, eight buyers put their best foot forward in hopes of being the lucky one. The property sold for considerably over the asking price, even though it had no garage. The draw was one of the most incredible park-like backyards in the neighborhood. A garage could be built. But, the backyard was irreplaceable.
It would be risky to use the sale price of an exceptional property like this as the basis for deciding on what price to ask for your home. A more prudent approach would be to delete this exception from the other comparable property sales in the neighborhood and use the remaining properties to help set the price.
Sellers can be their own worst enemies when it comes to selecting a list price for their home. Even though intentions are good, it’s hard to be objective when comparing your own home to listings in the neighborhood that have recently sold. This is because, after years of living in your home, you’ve come to accept its defects. Buyers, however, won’t be as forgiving.
So, if your home is up a lot of stairs, you’ll need to discount this factor in the pricing, even though you’ve come to live with this. Or, if your house is near a freeway, you’re list price should be discounted accordingly even though you no longer notice the noise.
HOME SELLER TIP: In order to price your home right for the market, you must have a good sense of how buyers will perceive your home. First, ask yourself why you’re selling. If you’re selling because the house no longer suits your needs, make a list of the reasons why your home no longer works for you. This exercise may help you to be more realistic about the pros and cons of your home.
The other factor to keep in mind is that different pricing strategies work for different markets. If you’re selling a home in Texas where the market is soft and there are plenty of homes for sale, you’ll want to list at a price that undercuts your competition. When buyers have plenty to choose from, you need to distinguish yourself from the pack.
In a hot market, like you currently find in the San Francisco Bay Area, many sellers are finding a reverse pricing strategy brings the best results. Instead of pricing higher than you expect to sell for and negotiating down from there, you list at the low end of what you expect to sell for and let the market bid the price up.
To ensure that you don’t sell too low using this strategy, you need to expose your home to the market for a week or two before entertaining offers. If you do use this strategy, be sure that you don’t list for a price that’s lower than you’re willing to accept if you don’t get multiple offers.
THE CLOSING: Not all homes in the hot Bay Area market are selling with multiple offers, and it’s nearly impossible to convince a buyer to pay more than the list price unless there are multiple offers.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers,” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.
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