Once we decided to downsize and sell our home, Joanne and I had to decide upon our asking price to put in the listing. Joanne is very much emotionally invested in the home and thinks that a sale price of anything less than $2,500,000 is a give away. I, on the other hand, want the house sold. Once I made the decision to sell, I just want it sold, as soon as possible. So, we comprised. We did it her way…… no really, we were very scientific in our approach, thanks to Joanne. For more information on our home, click here.
Being a former broker who handled residential sales, I knew how to check prices of homes currently on the market and homes that have been sold over the last year. The problem was that I was no longer associated with a residential brokerage and no longer had the same tools available that were available to me 7 years ago. Forsalebyowner.com provided some tools and I found many other, online pricing tools, such as Zillow, that were not available when I was selling homes in 2006 and 2007.
I checked out a number of free online pricing tools and even paid about $45.00 for an online appraisal tool. I found all of them, outdated and unreliable, but they did provide a good starting point. I caution you not to use these tools, blindly.There was also no shortage of real estate agents willing to provide their pricing recommendations. Frankly, I was pretty sure that I would list the home myself, having experience in home sales. However, my wife, ever diligent and properly doubting her husbands abilities, insisted that we interview a number of agents to see if they could do a better job than yours truly.
My experience tells me that, contrary to popular belief, listing agents tend to tell you what you want to hear to get the listing, rather than tell you what they truly believe the listing price should be. If they don’t agree on the “grand” highest price, a seller will likely go with the agent that will suggest the highest price, albeit, not necessarily the listing price designed to sell the house for the maximum price within the time period desired by the seller. This often is because they want the listing. To be fair, I believe that all of the agents that I spoke to were very much in the ballpark and gave me their best guess.
All of the agents and my research confirmed that the best listing price should be between $1,029,000 and $1,049,000, depending upon where the market was headed this summer and how quickly I wanted to sell. Our initial listing was at $1,045,000.00. As I will explain in later articles, I changed our listing price. To see current listing information, click here.
Proper listing prices are a function of many factors, including, among others:
- Current & Future Market Conditions;
- Debt on the home;
- Minimum return that the seller is seeking from the home;
- Desired timing of closing;
- How the home shows; and
- Last, but not least, what my wife wants.
Identifying the current market conditions was the easiest of my tasks. Predicting the market conditions over the next 4 months was a much more daunting task and one that I am still not sure that I have successfully accomplished. If I priced to high, the house will languish. If I price to low, we might not get our maximum return.
To predict the future market, I looked at and read every commentary and report that I could get my hands on. Year over year home sales volume in our area code for April was down about 25% from last April. On the other hand, prices were up 3.7%. The brokers that I spoke to all said the market was slow. They also said that inventory was down, which could explain the lower volume, yet higher prices. Volume could be a factor of inventory, while price is more of a factor of demand. Ultimately prices are set by the buyers, not the sellers.
This was not 2007 when I guaranteed sellers that the market was going down and would continue to go down for quite some time, encouraging them to list at prices below the market to sell quicker. I don’t think that I convinced anyone, except for Mike Durnerin, whose home I sold within 3 months. My logic was that, in a down market, if you listed at current market or above, you will be overpriced and not likely to sell. Come six months later, you will end up listing at a price much lower than what I recommended in the first place and ultimately it will sell for even less. I spoke from experience, effectively chasing the market down for 2 years in the early 90’s. Who better to tell you what to do than the fool who did it wrong, themselves.
So what did we decide on where the market is going in our area? We didn’t. My best guess as of two weeks ago was that it likely will hover about where it is now, neither going up or going down. I have already held 3 open houses and have had about 20 groups or families walk through the house. Some decent, but not great activity, but no offers yet.
To read my other diary posting, come back to www.creradio.com, where I will discuss, among other things:
- My decision on commissions and why I changed my initial choice
- Some of my marketing thoughts, not only to sell my house, but what brokers should be doing;
- What I learned about Craigs List and how to best use it to sell your home of those of your sellers; and
- Getting the house ready to sell