Pricing Property

We wish we had a dollar for everyone who asked us to give them a price for their property over the phone “sight unseen.” And then we wish we had a dollar for everyone who wanted a price “on the spot” after only 15 minutes in their home. Pricing is complicated and is both an art and a science. The truth is that it takes about a year for a smart REALTOR® to learn the science of pricing and many, many years of experience to master the art.

What is a property worth? The real answer is that it is worth the price a Seller will sell it for and for which a Buyer will pay. Unfortunately, this definition doesn’t help us to determine the appropriate asking price for a property!

There are many entities that are in the business of predicting value. And most of the time, unfortunately, you will get a different answer from each person with whom you consult. Also see the information on Appraisals vs. Assessments for more information on types of valuations.

When an experienced REALTOR® starts their assessment of market value, they should complete a thorough walk-through of the property. This walk-through includes seeing the interior as well as the basement, the exterior and, if it is a condo, the common areas. As they are walking through the property, it is important that they note which items would be included in the sale (like appliances and fixtures) and which will be excluded. It is helpful to obtain the age of the systems and appliances and to determine when renovations and maintenance were completed. These factors influence pricing, however Sellers cannot count on getting back a “dollar for dollar” return on renovations. Many times properties have been “over improved” for the current market and Sellers don’t learn this until they go to sell their property. TIP: Be sure to consult with your REALTOR® whenever you are considering making renovations!

Once the REALTOR® is familiar with the property, they will analyze the Multiple Listing Service (MLS) database and other tools available. They will also take into consideration the following:

a. Properties currently on the market. We analyze properties currently on the market as a way of checking our predicted price. Many of these properties are not necessarily similar, nor in the same neighborhood, so we look at them as if we were a buyer who is “comparison shopping.”

b. Properties that are Under Agreement/Pending. Properties under agreement or pending properties are analyzed for those that are “relatively comparable” in terms of location, features and size. We do not usually know the selling price until the property closes but we can guess that it is fairly close to the asking price if it sells quickly.

c. Closed Sales. Closed sales are the most important properties we consider when setting our price. We make adjustments to the comparable properties’ selling price to account for more/less desirable neighborhoods, the “setting” of the property, its amenities, its features and its condition.

We study the data and create a Comparative Market Analysis (CMA). The CMA is adjusted upward or downward to take into account factors such as the location, current supply of inventory, perceived demand for properties that are similar, condition of the property, the Seller’s motivation to sell and the timeframe.

Pricing a property properly when it first comes on the market is CRITICAL! If a property is in a great location, is in excellent condition and is priced properly, it should sell quickly. There is almost always “pent up demand” by Buyers who have seen all of the competing inventory and are ready to purchase.

If your property is priced right, Buyers will enter the property and ask themselves, “I wonder what it will take to get this property?” and then will proceed to write up an offer.

After 2 weeks, a Buyers may ask, “I wonder what it’s worth? It may not be worth what they’re asking if it is still on the market.”

After 3 weeks, Sellers should be considering an adjustment to the asking price. If the property stays on the market longer than 30 days, Buyers often will make “lowball offers.” Whatever you do, don’t let your property get “stale” on the market.

A well-priced property will attract a wide range of Buyers. If a property is overpriced, very few Buyers will look at it. Buyers and their Agents set criteria on their email notification programs and if your property is overpriced, it won’t even get considered. Buyers these days are savvy and looking for “value.” Gone are the days that Buyers would make offers because they were afraid they may lose the property.

QUESTION: How do I know if it is a Buyer’s Market or a Seller’s Market?
REALTORS® study Absorption Rate charts to determine the number of months of available inventory, based on the rate that properties were sold or “absorbed” the year before. Quite simply, we consider 4 months of available inventory to be a “balanced market.” When there is greater than 4 months of inventory, it is referred to as a Buyer’s Market where there are many properties from which the Buyers may choose and Buyers have the “upper hand.” With less than 4 months of inventory, it is considered a Seller’s Market and Sellers can be a bit more aggressive with their pricing.

When using absorption rates, it is important that one looks at the most current data for the type of property they are interested in selling (single family vs. condo vs. multi family), the city or town where the property is located and in the specific price range at which the property is valued.

If you let us know what type of property you have and the city or town where it is located, we can provide you with the current absorption rates. Contact us for more information about Absorption Rates.

QUESTION: What does it mean when a real estate agent “Buys a Listing”?
There are agents in every market who will give Sellers an inflated opinion of the value of their property in an effort to get them to sign the listing contract. Ask to see the “comps” that the agent used. And if one agent gives you a price opinion considerably higher than another, it usually IS too good to be true. If you were to end up with a real estate agent who “bought your listing,” the property would likely get stale on the market and the agent would continuously ask for price reductions until a lowball offer is submitted. At that point, you may be anxious to sell and may end up with less than the market value for your property.

QUESTION: So how much does it cost to have a REALTOR® evaluate my property?
True Home Partners have been successful because of the relationships and trust they build with clients and potential clients. If you are considering selling either now or in the future, we would be happy to provide you with a complimentary market analysis.

	Home Property Search Buying Selling Financing Our Listings About Us Contact Us Our Property Sales Free Home Valuation The Art of Pricing Pricing Case Study Property Value Range Staging Staging Case Study After Accepted Offer Home Inspection Prep What is an Appraisal Moving Check List Fire Dept Visit Pricing Property We wish we had a dollar for everyone who asked us to give them a price for their property over the phone “sight unseen.” And then we wish we had a dollar for everyone who wanted a price “on the spot” after only 15 minutes in their home. Pricing is complicated and is both an art and a science. The truth is that it takes about a year for a smart REALTOR® to learn the science of pricing and many, many years of experience to master the art. What is a property worth? The real answer is that it is worth the price a Seller will sell it for and for which a Buyer will pay. Unfortunately, this definition doesn’t help us to determine the appropriate asking price for a property! There are many entities that are in the business of predicting value. And most of the time, unfortunately, you will get a different answer from each person with whom you consult. Also see the information on Appraisals vs. Assessments for more information on types of valuations. When an experienced REALTOR® starts their assessment of market value, they should complete a thorough walk-through of the property. This walk-through includes seeing the interior as well as the basement, the exterior and, if it is a condo, the common areas. As they are walking through the property, it is important that they note which items would be included in the sale (like appliances and fixtures) and which will be excluded. It is helpful to obtain the age of the systems and appliances and to determine when renovations and maintenance were completed. These factors influence pricing, however Sellers cannot count on getting back a “dollar for dollar” return on renovations. Many times properties have been “over improved” for the current market and Sellers don’t learn this until they go to sell their property. TIP: Be sure to consult with your REALTOR® whenever you are considering making renovations! Once the REALTOR® is familiar with the property, they will analyze the Multiple Listing Service (MLS) database and other tools available. They will also take into consideration the following: a. Properties currently on the market. We analyze properties currently on the market as a way of checking our predicted price. Many of these properties are not necessarily similar, nor in the same neighborhood, so we look at them as if we were a buyer who is “comparison shopping.” b. Properties that are Under Agreement/Pending. Properties under agreement or pending properties are analyzed for those that are “relatively comparable” in terms of location, features and size. We do not usually know the selling price until the property closes but we can guess that it is fairly close to the asking price if it sells quickly. c. Closed Sales. Closed sales are the most important properties we consider when setting our price. We make adjustments to the comparable properties’ selling price to account for more/less desirable neighborhoods, the “setting” of the property, its amenities, its features and its condition. We study the data and create a Comparative Market Analysis (CMA). The CMA is adjusted upward or downward to take into account factors such as the location, current supply of inventory, perceived demand for properties that are similar, condition of the property, the Seller’s motivation to sell and the timeframe. Pricing a property properly when it first comes on the market is CRITICAL! If a property is in a great location, is in excellent condition and is priced properly, it should sell quickly. There is almost always “pent up demand” by Buyers who have seen all of the competing inventory and are ready to purchase. If your property is priced right, Buyers will enter the property and ask themselves, “I wonder what it will take to get this property?” and then will proceed to write up an offer. After 2 weeks, a Buyers may ask, “I wonder what it’s worth? It may not be worth what they’re asking if it is still on the market.” After 3 weeks, Sellers should be considering an adjustment to the asking price. If the property stays on the market longer than 30 days, Buyers often will make “lowball offers.” Whatever you do, don’t let your property get “stale” on the market. A well-priced property will attract a wide range of Buyers. If a property is overpriced, very few Buyers will look at it. Buyers and their Agents set criteria on their email notification programs and if your property is overpriced, it won’t even get considered. Buyers these days are savvy and looking for “value.” Gone are the days that Buyers would make offers because they were afraid they may lose the property. QUESTION: How do I know if it is a Buyer’s Market or a Seller’s Market? REALTORS® study Absorption Rate charts to determine the number of months of available inventory, based on the rate that properties were sold or “absorbed” the year before. Quite simply, we consider 4 months of available inventory to be a “balanced market.” When there is greater than 4 months of inventory, it is referred to as a Buyer’s Market where there are many properties from which the Buyers may choose and Buyers have the “upper hand.” With less than 4 months of inventory, it is considered a Seller’s Market and Sellers can be a bit more aggressive with their pricing. When using absorption rates, it is important that one looks at the most current data for the type of property they are interested in selling (single family vs. condo vs. multi family), the city or town where the property is located and in the specific price range at which the property is valued. If you let us know what type of property you have and the city or town where it is located, we can provide you with the current absorption rates. Contact us for more information about Absorption Rates. QUESTION: What does it mean when a real estate agent “Buys a Listing”? There are agents in every market who will give Sellers an inflated opinion of the value of their property in an effort to get them to sign the listing contract. Ask to see the “comps” that the agent used. And if one agent gives you a price opinion considerably higher than another, it usually IS too good to be true. If you were to end up with a real estate agent who “bought your listing,” the property would likely get stale on the market and the agent would continuously ask for price reductions until a lowball offer is submitted. At that point, you may be anxious to sell and may end up with less than the market value for your property. QUESTION: So how much does it cost to have a REALTOR® evaluate my property? True Home Partners have been successful because of the relationships and trust they build with clients and potential clients. If you are considering selling either now or in the future, we would be happy to provide you with a complimentary market analysis. CONTACT US FOR A COMPLIMENTARY MARKET ANALYSIS OF YOUR PROPERTY Home Property Search Buying Selling Financing Our Listings About Us Contact Us Our Property Sales 1730 Massachusetts Avenue, Cambridge, MA 02138 Real Estate Websites powered by TOP PRODUCER® \| Admin Login \| Site Map