The art and science of the asking price

by Jill Heineck, Associate Broker
Heineck & Company @ Keller Williams Realty Peachtree Road

Coming up with an asking price for your home is a delicate mix of math, market knowledge, and psychology. And it’s important to get it right. Asking too much can give you the same result as asking too little: selling for less than you can get – plus taking longer to do it.

Here’s how that happens. Prospective buyers  have access to a wealth of information on home sales and can tell when an asking price is high. Nevertheless, your home is fabulous and you get offers that are better than the going rate but below what you’re willing to accept. Your home ends up sitting on the market and you reluctantly reduce the price until offers start coming in again. Of course they’re going to be lower than what you’re asking. In fact you’ll likely end up selling for less than an offer you refused earlier – maybe even to the same person. Ouch!

CMA: Your best defense against seller’s remorse

It’s not unusual for homeowners to overestimate what their home can fetch, and to spare you seller’s remorse, a Realtor® does a comparative market analysis (CMA). This looks at sales of homes comparable to yours in your area – called comps – detailing the listing price, the actual selling price, special features, and how long each was on the market.

You might get “bonus points” for your home’s selling features. Say your kitchen is newly remodeled but the others in the neighborhood aren’t. This could help increase your asking price. On the other hand, if your home is on a busy road and most of the others are on quiet, tree-lined streets, your asking price will need to be less than the others. You get the picture.

Armed with comparisons like this and the going price for your area, a Realtor should come up with a realistic listing price. If it seems out of line with recent sale prices – either much higher or much lower – you need to understand why. Factors you’re not aware of and things out of your control could be at play that affect marketability and price.

Current events and local color

Things change. In my own community a proposed new development threatens the character and traffic pattern and definitely affects the asking price for any homes going on the market. Similarly, school redistricting can change – for better or worse – the property values and desirability of your neighborhood.

Then there’s the neighbors themselves. Their personal finances – or personal preferences – don’t have anything to do with your home, right? Sadly it’s not the case. A recent nearby home sale due to bankruptcy or foreclosure will lower your list price.

The same goes for a neighbor’s esthetic sensibility. This will probably never happen again, but I had a client whose neighbor expressed his allegiance to the Florida Gators by painting his roof to look like a football field. Certainly not the best situation for selling, but you can be sure I did everything possible to find prospects who were diehard Georgia fans.