Ask Renee: Pricing your home

Hi, this is Renee Han from Downing Fry Realty, and this is a series that I call Ask Renee, where I tackle some of the more common questions that come up in the area of real estate from buyers and/or sellers. Today what we're going to talk about is pricing your home to sell. I'm going to take a little bit of a step back from that because I want to start in a place that says, what is helps your home sell, what helps it sell quickly, and what helps it sell for, for top dollar. And I always call it the 3 Ps. One is preparation. So how does your home present itself? Is it appealing to buyers? Is it clean? Is it prepared? Is it non-cluttered? Those things have a huge impact on how much appeal that your home will have to prospective prospective buyers. The next one I talk about is presentation. So this is a big part of what a realtor should be doing for you, which is you've got a great presentation in terms of the preparation, but now how do you effectively market your home so that it is visible and differentiated with potential buyers— excuse me, yes, buyers. And that's what I call presentation. So how is the home presented to prospective buyers. And the last one I call is pricing, and that is, is your house competitively priced? Will the market see it as a good value based on the preparation? And that includes, you know, the, the layout of your home, the finish level, the area, the neighborhood. All of those things are part of that preparation in terms of how the home appeals to prospective buyers. But all very important, you could do your preparation flawlessly, you could do your presentation or marketing in an extraordinary way, but unfortunately, if the pricing's not right, it doesn't matter what work you put into the preparation and the presentation. So that's why I wanted to do a section specifically about pricing, because it is so important to get your home priced right. Not only is it important to get it priced right, but it's important to get it priced right from the very beginning. Recently I had a conversation with one of my homeowners that I happen to be selling a home for, and he came from a different, uh, industry than real estate, and in his industry they had a pricing strategy that said list high to begin with and then incrementally drop the price because you don't want to leave any money on the table. And although that may work very effectively as a pricing strategy in other industries, it does not work very well in real estate. Why is that? Because when I list your home, that very first day it goes out, we have more marketing leverage and a wider audience than we will likely get at all down the road from your property. Because when new listings hit, anybody that is looking for a new listing has been watching a community, has been watching a city, has been watching a particular type of home or a particular price range, they're going to get a notification that there is a new listing on the market. And people love new listings. They watch them closer, they're curious about them, and will never have that degree of marketing opportunity down the road. Now, price changes do tend to send off some triggers, but only if your particular property's been saved, not like I talked about with new listings. So again, it's so important to try to get the pricing right up front. So how do you do that? Well, the biggest thing is to make sure that you've got a qualified realtor who does a good job at comparative market analysis. They should be looking at the surrounding areas, they should be looking at finish levels within the competitive properties that have sold and that are currently listing, they should be looking at mortgage rates, they should be looking at all of the economic factors that affect how homes are selling, and then they should be looking at your particular property to compare it to the others, not just on a straight square footage comparison, but there are finish levels, there are things about a particular home within a community that will impact what buyers see as the true value of your home. Now, there are a lot of online tools that will give you a home valuation, and they're a great place to start but just know those are straight mathematical algorithms. They're not differentiating anything based on finish level or size of rooms or any of that. So, good place to start, but what you really want is someone to come in and really, really dive into the details of what's going on in your community. One of the unique factors that I found in the Naples real estate market, unlike other places I've lived, is prices are truly immediate community-based. You could have two communities sitting right across the street from one another, same size homes selling for very different prices. Up in other places in the US, they can do more of a geographic ring, but in Naples you truly want to look at a community level because amenity packages and builders and all of those things affect why one community prices differently than another. But again, it's important to look at all the factors that go into pricing a home. It's not an exact science. There's a little bit of an art to it, but you need somebody that can combine that art with that science and is willing to do the due diligence and deep digging to guide you in what is the most competitive price to list your home at. You're also going to want to think about not only the list price, but what do you expect the sales price to be. Now, some of the strategies you don't want to use in pricing your home are, "I need to get X amount out of it." That indeed may be very important to you, and it may be true, but that's not an appropriate pricing strategy. Because at the end of the day, you can price it at whatever you want, but you may, you know, discourage showings, you may discourage offers. And so make sure your pricing strategy is actually grounded in the true value, the market value of your home, and not how much you owe on it, and not how much you want to make out of it, and not in consideration of how much commission you may have to pay on it. That at the end of the day, what is going to determine the value of your home is what a particular buyer is willing to offer on your home. To purchase it. So again, pricing is hugely important. The best way to deal with making sure that you have your home priced appropriately is to work with a really good realtor who can do all the legwork and then go through those findings with you to guide you to the right posting, uh, pricing strategy. Now I will say, you're not going to get it right every time, and so there are times when you might need to do a price price adjustment, or some like to call it a price fix, or a price correction. But you want to try to minimize how many you do those, because those tend to send off other signals to a potential home buyer that could affect how your home sells. Again, this is Renee Han from Downing Fry Realty. If you have any follow-up questions, don't hesitate to give me a call at 239-287-2576. And I would also be delighted to help you with selling your home or purchasing one if you're in the market to purchase a home. Thank you and have a great day.