Setting your starting list price is tricky. Even some Metro Detroit realtors set home prices wrong. I see some Northville real estate sitting for months because the home's list price was set to high. Some of the reasons why home list prices are set too high are:
- The seller heard (not verified) what the neighbor down the street sold his house for
WHY is it wrong to do that? because the house down the street may have features that your home does not, because it the house down the street may have sold too long ago. The real estate market may have changed. Are home prices falling or are they rising rapidly? How do would you know that?
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- The seller needed a certain amount to buy their next home? They owe so much, so the only way they can get the money is by setting a high price and getting that high price.
- The seller based the list price on what they have into the house.
WHY is it wrong to do that? just because you put $30,000 in landscaping or a $70,000 in a high end kitchen does not mean that the house is worth $100,000 more than similar homes in the neighborhood.
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- The seller based it on what they read in the local paper.
WHY is it wrong? The local paper usually reports city wide. However, each neighborhood and home is different. When you price your home you should base it on homes in your neighborhood and homes within the square mile.
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How to set your starting list price.....right the first time
- Have a Comparative market analysis (CMA) done by one or more Metro Detroit real estate agents.
A Comparative market analysis shows:
- Homes that are similar to yours in style, square footage, and amenities
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- Only Northville homes that have sold recently, usually within the last 6 months
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- Homes that are close to yours in location. In your subdivision, or subdivisions like yours, within a square mile, within your city, and in the same school district.
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- Shows what price they sold for & how long ago so you can compare them to yours. The real estate market may have gotten hotter than it was six months ago. Or some of them may be from the summer....now it is winter the slow time. So you may have to price it a little more aggressively to get the home sold in the winter.
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- May include your current competition (current Northville homes for sale) that are similar to yours in style, square footage, and amenities. Why we do this is that home buyers look at a whole city, sometimes they look at multiple cities. For example Metro Detroit relocation home buyers usually have a list of cities they like to view. So you have to be in the game, in the correct price range to get your home sold. Buyers are going to compare your home to all the homes that are out there.
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By using a comparative market analysis (CMA) it gives you a black and white sheet so you can do your comparing. You can see what other Northville homes have sold for, how they compare to your home, and what an extra room, or an over sized lot may add or subtract from the price of your home. You, the seller have to take off the rose colored glasses and look at your homes comparables and be objective.
You can set you list price anywhere you want.... even over what the CMA shows. But you are going against solid market evidence. Remember when you set your Northville real estate price too high your home will sit too long, lose the market "newness and enthusiasm" and lose potential buyers. The longer your Northville home sits on the market the more buyers will low ball your or wonder what is wrong with your home.
And if you price your home too low you are leaving money on the table. My team's goal is to get you the most money possible and to get your home sold in the time frame you want. |
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