Get Real

I got a call recently from a homeowner who had received a marketing postcard from us. He had a unit in the same complex as our listing and felt that we must have underpriced our unit because he thought that his unit (with the same floorplan) was worth about $25k more. He listed all the extras that his unit had - more parking spaces, extra storage - and demanded to know where we had gotten our pricing. Since we do our homework very carefully, I was on firm ground in our discussion. It reminded me of a number of important things that sellers should remember about pricing.

1) For an accurate picture, you must use all the comparable properties that have sold. Only using the one you noticed for sale last week or the one that sold for the most money isn't going to give a realistic picture.
2) The sales must be recent. In any market, but particularly a falling one, only very recent sales give a true picture of what is selling. January prices don't mean much in August.
3) Sold prices are the only ones that count. Just because a unit was listed at $600k when you went to the open house doesn't mean that it sold for that price. Most homeowners are aware of listing prices in their area, but few are aware of sale prices. Sale prices reflect what buyers are actually willing to pay.

Some agents throw a pile of comparable sales at sellers and let them decide on the list price. I recommend a specific list price to my sellers and explain the reasoning behind the recommendation. I believe good pricing requires careful analysis of recent sales, current market conditions and buyer preferences. The disgruntled homeowner mentioned above might not like my price recommendation for his unit, but he should really consider whether he just wants to put his unit on the market or whether he actually wants to sell it.