Pricing
Getting Started
If you choose to enlist a real estate broker to do a comparative market analysis of your property, you should also know what to expect. A CMA (comparative market analysis) is a written evaluation of your property’s potential market value. The analysis should include details on recent property sales in your area with comparisons of those homes to yours. Details on current homes listed in your neighborhood, including information on how long they have been on the market, what assets they do and don’t have relative to your home and sometimes what they sold for previously, should be included in your CMA as well. A good analysis will also break down the price per square foot of each of the homes included in the analysis. While this is slightly arbitrary, the information can be key in assessing a home without any reasonably similar homes in the area to compare it to. In our analysis we include a discussion of what prices have been doing in the neighborhood in question over the course of the past six months. We also discuss what events are on the horizon or currently occurring in the neighborhood which may impact the home’s value at that time or in the future. Discussion of our overall marketing campaign is normally relevant to this conversation. Comparable properties are not the only item a CMA should include so expect details regarding the housing market in general, including interest rate trends, current and future developments relative to your neighborhood’s infrastructure and numerous details related to your home’s assets and those of the homes compared. Price impacts everything so make sure you get the justification.
Comparative Market Analysis (Free)
If you would like us to conduct a comparative marketing analysis of your home to determine the potential market value it would bring, please feel free to contact us via phone or email. Email: kimgolik@johnlscott.com bradgo@johnlscott.com Phone: Kim 206-409-1660 or Brad 425-698-7771
The Pitfalls of an Overpriced Home
When an agent overprices a home, it sits on the market. When a home sits on the market it needs to have its price reduced to attract buyers and stimulate interest. Sometimes this reduction can create a price point much lower than what the home should have actually brought when initially listed.
Remember, the first two weeks of a home’s listing are the most important. Agents who inflate the value of a home in order to get a listing end up having to tell those sellers to reduce their price after a month or more. Once this occurs, the motivation and activity related to the home is lost. Priced correctly, taking into account the market at that immediate time, should give you no reason to act anxious. A good Comparative Market Analysis and professional Real Estate Broker will justify their suggested price point through facts not promises.
Price Trends
The primary reason for properties not selling in a reasonable amount of time is improper pricing. However, please note that this generalization can be attributed to more than simply improperly priced homes.
Sometimes it is simply a "buyers market" in which there is more sellers wanting to sell than there are buyers. When this is the case, price wars can ensue and price reductions can become the norm. Property values move downwards as supply exceeds demand.
At other times, your neighborhood may be of particular interest to more homebuyers than there are available listings in which case your property value will go up as demand increases. This point is important to take into account when deciding when to put your home on the market.
The Cost to Sell
If you decide you need to negotiate with an agent over his or her commission, do so, but be aware of the pitfalls. Agents who negotiate down their commission on a sale can do a number of different things to the detriment of the client.
A good agent earns every penny of their commission. If an agent with a buyer sees a listing which has a reduced commission, which translates to losing thousands of dollars to that agent, that agent may be less than interested in promoting the purchase of that home. By reducing another agent’s pay because an agent wants a listing, that agent has not completely acted in their client's best interest.
Our job is to get our client’s home sold within a set of conditions that make them comfortable and we do so without ever reducing the buyer’s side commission. To make a decision which impacts another agent’s bottom line and may discourage them from promoting our client’s home is certainly not in our clients best interest.
If your decision to hire a real estate agent based on the fact that they will reduce their commission, think of this: If they are so quick to give up their money when negotiating, what will they do with yours?
