'Come On Down' ... Words You Won't Hear if the Price is Right

Your house, without a doubt, without me seeing it, is worth millions. It's far superior than every house on the market and people will pay a premium for it because it is your house. You painted it. You cleaned it. You updated it. Rightfully so, you should feel that way.

It's called house pride and it is important. However, in a market where banks are being scrutinized for throwing money to buyers like it's candy at the Fourth of July parade, from a financial perspective your house may not be worth the amount you imagine. Emotionally, no one can put a price on it.

When you are thinking about selling, pricing your house correctly is critical. The first step is to invite one or more experienced local real estate agents into your home for the purpose of preparing a detailed CMA – comparative market analysis. This does not cost anything and it does not obligate you to sign any contracts with these agent(s). So, when you hear about agents giving away a "free" market analysis, it's like a company telling you that they are giving away free job interviews. When we say that they are "complimentary," it's a polite way of telling you that there is no cost involved. Although we put in a lot of time and effort and would love to be compensated for our time, it is essentially part of the interview process.

Now, if you have more than one price opinion from experienced agents and one makes sense to you and the other is vastly higher and seems ambitious, it's important to know three things:

1. If the results from CMA No. 1 make sense to you when reviewing the comparable sales, it will make sense to buyers looking at your house. You aren't going to get X plus Y for your house if the majority of experienced agents believe it is worth X.
2. Buyers are smart. Many have examined and analyzed every single house and sale price of those surrounding yours. 
3. Succumbing to an agent who is essentially, as we say, trying to "buy your listing," will only hurt you. This means that he/she will seduce you (remember, we are in sales) into believing that the "high" price is the right price and that you should try it out. He/she will explain in a very nonchalant manner that it can't hurt you, and then, when your house gets overlooked by qualified buyers in your actual price range (who are just waiting for the next great house to come on the market in their price range) and doesn't sell, the price will be reduced.

By that time, it may be too late. You aren't the new house on the block any more. Agents can smell a bought listing a mile away and we also know who in town will try this with you. It's not worth it. As sexy and intriguing and harmless as it sounds, if it's too good to be true ... you know the rest.

If the three rules of buying real estate are location, location, location, then the three rules of selling are pricing, pricing, pricing. It's just about everything.

At the end of the day, the list price is always up to the owner(s) of the house. You could have an agent highly suggesting the price for your house, but it is your decision. You could go higher, lower or take the expert's advice. We, as experienced agents, do this every day. We know the inventory inside and out. It's our job. As smart and fabulous as your friends are, especially those who haven't bought or sold in 15-plus years, they don't know where your house should be priced. Neither does your best friend from camp who is selling real estate in San Francisco and believes that your $900K house should really be $1.5 million. And neither do your grown children – regardless of where they went to college.

Your list price should not be based on what you "need" to get and what you "want" to get for your house. These factors are generally irrelevant when determining market value.  The only time it does pertain is when the sale is a short sale and the bank needs to see that you are making an effort to recoup what is owed.

The sale price is very different for you than for your buyers. Your $1,000 is his/her Venti non-fat latte.  For you, it is money in the bank. For most buyers, it's a drop in their mortgage.  Getting your price right the first time, and not having to drop your price in $20,000 increments (real money for you) will only pay off for you.

Here are a few examples of actual houses that have sold far from their original asking price. Out of respect for my fellow agents, I will not list the addresses – just the prices. These homes were on the market in 2009 and sold in 2009 or 2010 and may have come on the market prior to 2009. I am doing this to demonstrate to you that if you are overpriced, it will take longer to sell. The longer your house in on the market, the further away from your original price you will get in the sale.

For every one of these mentioned, there are at least 10 more.

1. List price $429,000.  Sold 12 months later for $325k (-$104,000)
2. List price $575,000. Sold two YEARS later for $360k (-$215,000)
3. List price $650,000. Sold 11 months later for $480,000 (-$170,000)
4. List price $739,00. Sold 11 months later for $574,000 (-$165,000)
5. List price $749,000. Sold seven months later for $610,000 ($-139,000)
6. List price $869,000. Sold 11 months later for $630,000 (-$239,000)
7. List price $845,000. Sold 11 months later for $710,000 (-$135,000)
8. List price $899,000. Sold 11 months later for $700,000 (-$199,000)
9. List price $1,399,000. Sold one year later for $1,080,000 (-$319,000)
10. List price $1,695,000. Sold almost two years later for $1,246,000 (-$449,000)

Statistically, houses that are priced correctly sell in a short (within 3 months) period of time and for a number close to (within 96 percent), or above their asking price.

Every house is different and every house for sale has its own situation. There are some houses that are very specific to a certain buyer and may take longer to sell (horse farms, antiques, waterfront, etc.).  

The reasons for selling vary. However, if you are interested in selling your house and you want the buyers in the market to take you seriously, it is only to your benefit to heed the advice of the real estate agents with whom you trust (like myself) to price, prepare, market, and sell your home successfully.