Pricing your home right – that is, pricing for a sale and the most profit – is no easy task. You can’t overprice because then your home may languish on the market unsold. And after about three weeks, your chances of selling at all at a reasonable price drop dramatically. Then, again, you can’t price too low because buyers may assume something is wrong with the home. Or, in some cases, it could instigate a bidding war so that you get a really good price. The problem is, though, that you just never know how it will turn out. So pricing correctly is your best course. Let’s take a look, then, at 5 things you should know about pricing your home in Metro Detroit Michigan.
1. Comparative Analysis to Begin
If you truly want to price your Metro Detroit Michigan competitively, your first step should probably be to perform a comparative market analysis. This may be the best tool to help you arrive at fair market value.
The comparative analysis process involves looking “at every similar home that’s been listed in the same neighborhood as your property over the last three months. . . . The list should be limited to homes within a 1/4 mile to a 1/2 mile radius unless there are only a handful of comps in the general vicinity or the property is rural.”
You also need to make sure to pay close “attention to neighborhood dividing lines and physical barriers such as major streets, freeways, or railroads.” Homes on the other side of such dividing lines can vary hugely in price. Also, make sure you look at homes with similar square footage, with only “a 10% variance up or down if possible.” And ensure that the homes are similar in age and desirability.
Really, your best bet in following this and the subsequent two tips for pricing your home in Metro Detroit Michigan is to use a qualified real estate agent. A local agent will have the expertise and knowledge to make accurate pricing analyses. (To discover more, call 248-330-4421.)
2. Listing-to-Sale-Price Ratios and Withdrawn/Expired Listings
Other things you need to have a handle on for pricing your Metro Detroit Michigan home are listing-to-sale-price ratios and the withdrawn and expired listings.
After careful analysis, you may have determined what you think is a fair price for your home. But many homes in the area may actually sell for significantly less (or more) than their list prices. A careful examination of the listing-to-sale-price ratios will tell you this.
In addition, you need to check out withdrawn and expired listings. Here’s how industry pros explain the importance of this: “Pull the history for any expired and withdrawn listings to determine whether any of them were taken off the market and relisted. . . . Look for patterns as to why these homes didn’t sell and note any common factors they might share. . . . Think about the steps you can take to prevent your home from becoming an expired listing based on this information.”
3. Pricing in Accord with Market Conditions
A very important element of pricing your home in Metro Detroit Michigan is pricing in accord with current, local market conditions, which will determine in large part where you can set your price. Be sure to consider the following:
Supply and demand are the basic elements of economics. So pricing you hose correctly will involve a consideration of how much inventory there is with respect to demand.
THE KIND OF MARKET
Typically, a real estate market will fall into one of three categories (though it’s not always entirely clear cut):
- “Neutral market: In a neutral real estate market, there’s a good balance between the number of buyers and the number of homes for sale. In this market, you’ll want to keep an eye on nearby comparables to make sure your pricing is similar.”
- “Buyer’s market: In a buyer’s market, you need to be priced slightly lower than the competition, because there are more homes for sale than there are buyers in the market.”
- “Seller’s market: In a seller’s market, you can add about 10 percent to a comparable sale, since inventory is limited and buyers are competing for fewer homes.”
The season of the year also matters for pricing your home in Metro Detroit Michigan because some seasons are better than others for home sales. Historically, spring has been the best time to list a home with fall coming in second best. During these seasons you may be able to price a little higher.
Again, keep in mind that your local agent can be a huge help in pricing in accordance with local market conditions.
4. Price Cutting After Listing Permitted
Also, don’t be afraid to lower the price after listing. Having your home sit on the market unsold for a long time is the worst thing that could happen, so cut the price if you need to. In fact, “60 percent of sellers change their price at least once. The key is to recognize quickly that you’ve overpriced, and make an accurate adjustment.”
5. Bidding War?
Conventional wisdom has it that a bidding war is a good thing – a way to drive up the price of your home and get higher offers. Often, that’s true, but not always.
Occasionally, in the case of a bidding war, when you take that high offer, the buyer’s financing falls through. When that happens, you have jeopardized the lower offers, and you may even have to start over from scratch.
Local Expertise Trumps
Correctly and competitively pricing your home in Metro Detroit Michigan is, as you can now see, no easy task. There are a host of variables to take into account, especially on the local-market level. That’s why it’s so important to have an experienced local agent on your side.