Power Pricing Strategies
Pricing is an art, not a science. Alexis Bolin, CRS®, ABR®, a veteran real estate practitioner with ERA Old South Properties Inc. in Pensacola, Fla., explains the ins and outs of pricing a property.
What’s the process you use to arrive at a price for a house?
Bolin: I go out for a radius around the home to see what other properties I can find. I’m looking for what has sold, what’s on the market now, and what didn’t sell. The distance I extend my circle depends on how many comparables are available, but I try not to go any farther than two miles from the property. It’s just as important to look at what’s on the market today as where the sales were. What if I find recent sales at $200,000, and today’s sellers are only asking $190,000 or vice versa?
Once I gather my data, I do my comparisons and make my adjustments based the condition and upgrades in each of the properties. I try to end up with a price range—high to low—that I think the property can sell for.
When I present the information to the sellers, I explain the differences among the properties and discuss average days on the market. I then ask the sellers to decide where they want to position themselves in the market. If houses are taking 180 days to sell and sellers wants to be out in 90 days, then we don’t want to go to high side of that analysis. Everything is based on sellers’ needs.
Besides the comparable market analysis, what other key factors do you consider in setting a price range?
Bolin: We look at amenities, not just the number of rooms and square footage. I equate it with looking at cars. You can buy a Ford or a Mercedes. They both have four tires and engine, but the quality and the number of extras can be a lot different. Maybe you have a small house but it’s fully loaded—Corian countertops, crown moldings, marble floors in the foyer and bathroom, and oak cabinetry in the kitchen. How does that compare with a bigger house that doesn’t have all these amenities?
To decide how much high-quality amenities add to the price, I suggest consulting a qualified appraiser in your area. If the appraiser thinks solid oak cabinets are worth $1,000 to $1,500 more than painted plywood ones, that’s the price to use as a guide. When you’re sitting with sellers, you can justify that you didn’t pull your numbers out of the sky.
How do you factor a rising market into pricing?
Bolin: Part of it is a gut feeling, and part of it is assessing the supply and demand in the market. Where and when was the last sale? If it was three months ago and there’s very little inventory on market, you may be able to push up the asking price. Even in a buyers’ market, you can still get asking price if there’s nothing else available in a desirable neighborhood.
Should issues such as sellers’ urgency be reflected in the price?
Bolin: In general, if you want to speed up the sale, you do a price adjustment. But I suggest putting the reason in the ad—divorce, estate sale—so buyers understand why it’s a good deal. If you say nothing, it does raise questions about what’s wrong with the property.
What’s the greatest danger from overpricing?
Bolin: The house sits and doesn’t sell. Then it gets shopworn, and you end up taking a lower price than you might have if you priced it correctly to begin with.
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