The Town Broker

Pricing Your Home For Sale: The 5% Rule

Pricing your home correctly so that you get a sale (and don’t sit on the market forever), is one of the most important skills that a professional Realtor can offer. I met a seller in Westfield the other day who was selling his home on his own (For Sale by Owner). It is a terrific house… well maintained, and in a desirable neighborhood. I asked him how he came up with his asking price. He assured me that he kept a close eye on recent sales in his neighborhood, and that he knew the likely selling price for his home. Incidentally, I though his target price was correct.  But then he shared how he came up with his marketing price, and that’s where things got problematic…

He told me that he knows many buyers in today’s market look to negotiate a hard bargain. He simply added a 15% cushion to what he thought was the correct sale price. This way, he’d have room to negotiate.

On the surface, I understand his logic. Unfortunately, the numbers aren’t on his side. The surprising truth is that you can actually get MORE for the sale of your home by asking LESS for it. Let me explain…

Pricing Within 5% Improves Sales Outcomes

While it’s true that buyers today are looking for a bargain, they also recognize value when they see it. Homes that are priced correctly (within 5% of the final selling price) can disappear fast…often with multiple bids (yes, even in this market). But with inventory levels up in much of our market area, buyers can be picky. If they think the price is too high, they’ll simply wait for a price correction. And if sellers wait too long to get it right (more than 30 – 45 days), the market will simply pass them by. The end result is that their price improvement will need to be pretty dramatic in order to catch the buyer’s interest again…bigger in fact, than it probably needed to be.

Still not convinced? Then check out these numbers: Read the rest of this entry »

Tags: 5% Rule, Home For Sale, Home Pricing, List to sale ratio, LP/SP

Real Estate Statistics: What You Need To Understand. (Part 3)

Real estate statistics can be confusing, and real estate is FULL of statistics! In Part 1 of this 3-part series, I looked at market absorption, how it describes the “dynamics” of the real estate market, and how you can use it to your advantage! In Part 2, I reviewed how the days on market (DOM)  tells how much the market values a listing. In this post, I’ll cover the final of the big 3 statistics: Sale Price/ Original List Price Ratio.

Sale Price/ Original List Price Ratio. 

This number simply tells how close to the original asking price the seller got for their home. It is NOT the number most commonly reported by the major real estate websites, or even by agents and brokers when they tout their marketing success. As a consumer, you’re more likely to see Read the rest of this entry »

Tags: List to sale ratio, LP/SP, market report, real estate statistics