I frequently come across prospective buyers who hold the view that real estate agents deliberately price properties under the market to instigate a bidding war. I understand this line of thinking, and while it is possible that this may be the case in some areas, I do have a bunch of points to make to help explain property pricing that can hopefully help. In my experience, there's a very different perspective to consider here. Many of us know this but may forget to recognize the fact that each house is different in terms of its condition, upkeep, upgrades, and location, and may not fetch the same price as the nearby house that just sold 30% over asking price, even if the house has identical square footage and lot size as yours and perhaps even has the same updated look as yours. There's a lot more to pricing a home than just size of home.
Author: Ranjana Shreedhar, Realtor. Contact me through Email or on phone (408)861-8026 or through the handy contact form on this page.
School BoundariesAn angle to think of is school boundaries. Many homes are in a situation where crossing a certain boundary means another city's school district that may not be at the same comparable level as the sought-after school district on the other side. This means homes selling for hot prices just a block away may not mean that the same may come true to the home involved in the lower scoring school district. Many parents would give up on their list of preferences if the school district alone were to be a super stellar performer.
Home Related AspectsAdditionally, factors such as the age of home, the level of upkeep, amount of repairs and upgrades needed to bring the home to a move-in condition, and direction of the home and resultant natural lighting, curb appeal, landscaping, etc come into play when considering pricing of a home for sale. For instance, even with all of these factors working in your favor, extraneous factors such as unsightly electric, phone and cable company wires criss crossing your home's backyard or a large electric tower close the house or a gas station close by are factors than have the potential to affect the pricing of the home.
Sudden Market MovesOne other important factor is that pricing a home at the right level with some margin of defensiveness always protects the seller from sudden moves of the market where prices or demand moves down rapidly. For instance, in just a couple of weeks in 2014 when interest rates rose, albeit for a short period of time, many homes sold at much lower prices and with lower number of offers than anticipated premiums over list price.
Market DriversIt is a considerable challenge for the real estate agent to price a property way lower just to attract high premiums. Its what the market will bear to offer. If there is an excess of buyers to number of homes available, bidding wars are an expected outcome. If there is significant moneys coming from international buyers, and low interest and low dollar values are the going trend, then this will over run any local demand and result in premiums. These market factors are a reality in the Bay Area.
The Right Kind of CMAConsidering all of the above factors and more, an indepth comparative market analysis is prepared by a professional Realtor (not a standardized generated document) to present a well thought out comparison of nearby sold properties factoring in the differences, and pros and cons with respect to location, condition, schools, amenities, upkeep, etc in order to arrive at a recommended price range. I make it a point to visit all homes on sale in a neighborhood to learn everything about what is good and bad about the homes, in order to ensure easy comparisons for any upcoming listing of mine. This helps me put my best experience and expertise to work for you to price your home at a level that can attract significant interest and help sell at a good price. Even in the current sellers' market, there are some homes that are sitting for a long time specially because the pricing has not been done well. Price it appropriately and you have a winner. Don't hesitate to reach out for a friendly no obligation call.