San Francisco Chronicle - (Sunday)
What to know when pricing a listing.
Effectively pricing a property might be the most vital part of listing a residence. So how do Realtors decide on that magic number?
Realtors said there’s a number of factors that go into the decision, including the seller’s motivation, the condition of the property itself and what similar listings in the area have gone for recently.
“Most sellers want the highest possible sale price, but sometimes, other concerns impact this decision,” said Adam Gavzer of Compass. “Do they need a rent back? Is there a lot of equity or will the sale represent a loss or break even?”
Successfully pricing a home is an art, not a science, said Annie Williams of Sotheby’s International Realty.
“If a listing is the type that is sure to have multiple buyers, then you really can’t price it too low; the market will carry it to where buyers perceive value,” she said. “I know in some other markets, listings are priced over value and buyers expect to make lower offers, but that has never really been the practice here.”
If there’s any uncertainty, err on the side of underpricing the home, said Williams.
“In general, the worst thing you can do is price your home too high. It sits on the market longer, buyers start looking for problems instead of falling in love with it, and statistics show that the longer a home stays on the market, the lower the price per square foot,” she said. “It’s better to get it right the first time instead of doing price reductions over time.”
Realtors like Jeff LaMont of Coldwell Banker prepare detailed market analyses for all of their seller clients, including data on recent comparable sales. The strength of the current market is also taken into consideration, he said.
“Once we have arrived at the projected fair market value, we need to determine our list price. A strategy many agents use, given current market conditions, is to put the list or asking price below the fair market value to increase buyers’ interest and set a date to look at offers,” he said. “This can be a tough environment for buyers, but this strategy most often works to the seller’s advantage.”