Listing Price – Tips for Determining a Home’s Value
You’ve met with a new seller and have taken a tour of the home that they hope to be parting ways with. They’ve shown you all their favorite features – and now, they can’t wait to hear your assessment on the listing price.
The pressure is on. Obviously, the seller is hoping you’ll suggest a listing price that soars beyond their wildest dreams. But if the seller is truly interested in, well… selling… he may need to stomach a reality check before listing his home at more than it’s worth.
Reasons that Sellers Struggle to Price Their Homes Competitively
Sellers can struggle in the listing price department for a few reasons. First, while to you it’s just another house, to them – it’s home. In fact, it may be more than just a home to some sellers. If they’ve done their own improvements (retiled, painted, etc.), the seller may even see the property as his or her own work of art. You can help emotionally-attached sellers thing about listing price through a more objective lens by sitting down with them and writing down a few “statistics” about the property. Three bedroom, two bath, one car garage, square footage, etc. Remind them that no matter how beautiful the home looks, these statistics will never change. Pull up a few similar homes that are currently for sale and suggest a competitive listing price based off of these statistics.
Second, some sellers can struggle with a listing price reality-check because they’ve bought in to the “location, location, location” mantra. Yes – location is important! But it isn’t everything. A 3 bedroom, 2 bath home is still a 3 bedroom, 2 bath home, no matter where you put it. With that said, if the home is on waterfront property (or similar), the seller can usually expect to enjoy some pricing perks. But it’s important to show sellers similar homes for sale in their local area, in order to help them price competitively.
Lastly, sellers can find pricing competitively to be difficult if they are trying to compare a current suggested listing price with a previous market. Two years ago in Florida, homes were selling at astronomical prices, and receiving multiple offers within days. Today, the market has cooled off a bit. If a seller’s expectation is tied to yesterday’s reality, he may have trouble understanding why things have changed. You can help this seller by showing him comparable houses and pointing out how many days each listing has been on the market. It may also help to share some research on the topic of current real estate supply and demand.
The Seller Makes the Choice
At the end of the day, the seller sets the listing price. Maybe he takes your advice… or maybe he doesn’t. Keep in mind that some sellers are more just “listers” – meaning that they are perfectly content to list high, and would rather just stay put than set their listing prices at market value. In these cases, consider carefully whether it’s worth your time and investment to represent the property.
Listing prices are ultimately determined by the state of the current market. So don’t short-sell your clients (or yourself) – but do actually plan to sell.
