Strategic pricing - it's what you need to generate optimal showing activity, drive demand, and ultimately get you not only the best price for your home, but also the best terms. So, what's the secret sauce to getting it right? Let's uncover the hidden gems beyond the basics and unlock the keys to a successful sale.
I've been in the Baltimore real estate industry since 2008. I specialize in representing home sellers in the Greater Baltimore Area and earning them the most profit possible on settlement day. Pricing is one the major components in getting your home the attention it deserves. So where do we start?
An unsupported, pie-in-the-sky number won’t work - not only do you risk the home not appraising, potentially impacting a buyer’s ability to secure financing and consummate the purchase after you’re already under contract, but you’ll also sacrifice showing activity when the property is new to the market and rack up days on the market, leaving prospective buyers to believe there’s something wrong with your home and cause them to pass it over entirely.
A price supported by comparable units that were sold within the past six months is a good place to start as it’s what the appraiser will use in evaluating your Baltimore home's value once an offer is accepted. But, recently sold comps are not the only factor in pricing your home today. We’ll also review active listings, pending sales, and expired offerings.
While appropriate pricing is important when listing your home, the marketing approach also really matters. For the purposes of this article, assume that the only other listings we are reviewing are truly comparable to yours and proper marketing was done - staging, professional photography, compelling listing description, etc and that the other homes didn’t have known latent defects.
#1 - Review Active Listings - Eye Up & Beat The Competition
Active listings evidence homes you will be competing with and are indicators of the price point in which homes may sit on the market.
Just before you list your home, we will look at similar homes that are currently on the market in your area. It’s imperative that we review every home that you will be competing with. And you will be competing - a buyer searching for a home in your area at a particular price point is going to check out various options before making a decision.
How does your home measure up to the competition? Where is each home priced and how long has it been on the market? If it has all the offerings yours does with no major drawbacks and it has been on the market longer than the average days on market for the area, it’s likely overpriced. List at the same price and your home will also sit on the market.
Tip - The pictures of a property only tell so much. Sometimes the pictures glamorize what the house is like in person. A dysfunctional layout, cigarette smoke smell, or an unphotographed and unappealing unfinished basement could be deterrents you aren’t seeing online, for example. Attend an open house to see what it’s really like, or I can schedule a private showing for us. An in-person visit will confirm whether the house is truly overpriced or if it simply has less-than-desirable components.
#2 - Pending Sales - Take A Page From Someone Else's Book
Pending sales show us exactly what price point worked in getting a home sold quickly. So why not investigate and take a page from that seller’s book?
We will look at similar homes that are already under contact in your area. Which ones had the fewest days on market, thus went under contract the fastest and where were they priced? This should be a major indicator of exactly what a buyer in this market is willing to pay today (whereas comps six months ago sold when the interest rate, supply, season, and market were somewhat different). Of note, the homes that sold quickly, especially in a week or less, are most likely to have earned a full-price offer and may have even ignited a bidding war. We will keep an eye on these as they may close before you get to the appraisal phase, making them your best comps. We will take particular note of similar pending sales with few days on market and emulate their pricing approach.
On the flip side, of the similar homes that are under contract in your area, which were on the market the longest? Let’s try to figure out why. Is there evidence of multiple price drops indicating that the sellers listed the house too high initially and then slowly came around to what the market was willing to pay? We will note the longer days on market and how the price changed and avoid replicating their pricing approach so we don’t waste time.
#3 - Expired Listings - Avoid Failure To Get A Deal Done
Homes that are similar to yours, had attractive marketing, and recently expired are indicators of the price point at which your house probably won’t sell.
Let me first refresh your memory on what lapses in order for a home to expire. A home expires because the listing term lapses before a home goes under contract. The listing term is the length of time a brokerage is able to work on selling a home for a seller. The term is negotiable and therefore varies. Typically the term is at least three months and usually no more than a year. When a listing expires, it means the listing term ran out before a sale occurred. We look at these closely for the same reason as the pending units but with more scrutiny. These homes did not sell at all. If the marketing is attractive and there aren’t any noted defects, the likely culprit is price. Avoid pricing your home in this range as you risk a sale not happening at all.
Remember, Selling Your Home Is An Active Process
The data from active, pending, and sold and expired listings within the last six months will guide us in successfully pricing your home. Remember, selling is an active process so we can’t choose a price, post the listing and adopt a “set it and forget it” mentality. I’ll monitor the market each day and collect feedback from each showing and relay this information to you promptly so if a change is warranted, we make it quickly and get your home sold within your desired timeframe.