Pricing is the most important part of “marketing a home for sale” that sellers and their agents do. Over-pricing is the #1 reason why some homes don’t sell. A property has the best chance of selling at highest value and quickly when it’s priced right from the start. Here’s a quick list of the most common pricing errors which Silicon Valley home sellers should avoid because they often lead to over-pricing.
Five Pricing Mistakes to Avoid
- Selecting the list price of the home based on what you want or need rather than on what the market will bear (the “probable buyer’s value” of your home).
- Using dissimilar “comps”. The best comparable properties will be within a mile of the subject property, within 10% of the home’s size and 10% of your lot’s size, in the same school district, ideally in similar condition and architectural style, and on top of all that sold very recently. Don’t compare a patio home or zero lot line home with a house on a normal lot where the owners can walk fully around the property.
- Hiring an agent who tells you an inflated price and then using that number. Look at the numbers yourself. A better practice is to first select the best Realtor and then arrive at a pricing strategy together. Many agents are pressured by homeowners to tell the owner what he or she wants to hear. This is truly counter-productive!
- Not factoring in negative issues which could impact your home’s value, such as proximity to busy roads, high voltage power lines, the look of nearby homes and yards, non-permitted work or additions, etc. Ignoring it – or believing that buyers will – means you will be perpetually too high in your assessment of your home’s value.
- Failing to include the current competition in your assessment of your real estate’s value. Are there a lot of homes like yours on the market? Are they selling or staying on the market? The buyers are are sending signals, so listen to them! Are there short sales and bank owned homes selling nearby? Unfortunately, those are going to pull your home’s value down, so those need to be included in your assessment. It is very important to establish the probable sales price of your home by looking at the competition as well as the pending sales and recently sold homes.
Appraisals vs CMAs
Formal appraisals are not the same thing as a competitive market analysis (CMA). An appraisal only looks at the already sold homes (and perhaps may factor in the current market climate, but not to the same degree at CMA would do). A good CMA will provide data on the active listings, pending sales and nearby solds which are similar to the subject property. It ideally will be very honest about any negative (as well as positive) elements that alter the likely sales price of your home. A home’s appraised value may NOT be its market value!
If you’d like to chat about selling your home in San Jose, Los Gatos, Saratoga, or nearby, please call or email me. When we meet, I will give you a complimentary copy of my book, “Get The Best Deal When Selling Your Home in Silicon Valley“.
Further reading suggestions:
See my short video with tips for hiring a Silicon Valley Realtor.
Or check out other posts on this blog tagged Sellers Tips