Intelligently Pricing Your Home is Critical to a Successful Sale

Copyright © 2014- 2019  AUTHOR: Paul R. Marino, REALTOR®, e-Pro®

 

You know from previous blog posts that accurately pricing your property is the single most important component of selling your home. The second (as you know from following this blog) is MLS exposure, which will automatically replicate your property details across the Internet to Realtor.com®, Zillow®, Trulia®, and literally hundreds of websites.

 

So, your task is to identify the optimal price that will generate an "at market" sale in a timely fashion. Since the dawn of man, the procedure for identifying this price was to pick up the phone, dial up three or four real estate brokers, get them to come out (trust me, they will be in your driveway before you can hang up the phone), and give them the "grand tour". Most sellers figure, "Heck, this costs me nothing, so why not get multiple opinions, synthesize this information, and voila, there's my ask price." For some people, this is the way to go. But you're not just "some people". You're smarter and more sophisticated than that.

 

The beauty of the Internet is that the mass dissemination of useful information has "leveled the playing field". Back in the old days, the only way to find out the sale price of your neighbor's house was to call up a broker friend, and ask them to look in the three inch thick "MLS book" that was published every two weeks. These books were guarded more closely than the PIN number on your bank account. Any broker who let one out of their sight was fined, or worse. No more.

 

Want sale price information? Look no further than the search function on THIS website. In addition, the National Association of Realtors (NAR) is more than happy to provide this information just for the asking. Simply go to Realtor.com®, or the public side of your local MLS (for example, the New England Real Estate Network (NEREN MLS), covering all properties in Vermont and New Hampshire). The only downside is that the level of detail is somewhat abbreviated (although it will display address, price, sale date, # of bedrooms, # of baths, square footage, and acreage). These are the "biggies" that should assist you in setting your price, although more detail (which is offered in the full blown, "members only" version of the MLS is obviously better.)

 

So - back to your original idea of calling up three or four brokers to "set your price". I don't know about you, but I'm always a little skeptical when I hear opinions from parties that have a vested interest in the outcome of a transaction. For you ladies out there, remember the last time you asked your husband or significant other, "Honey, does this dress make me look fat?". Guys...you know if you so much as utter anything other than, "No, sweetheart, I think you look GREAT in it!", you know there will be hell to pay.

 

THERE HAS TO BE A BETTER WAY.

And there is. My numerous blog posts outline a very specific, comprehensive strategy for pricing your property. But it goes without saying, the absolute best way to determine the value of your property is to examine a multitude of recent transactions, and current active listings. A SMARTER WAY FORWARD. You might have heard that hiring a real estate appraiser might be the way to go. Presumably, the appraiser doesn't know you, or have any potential conflict of interest in whether the value comes in high, low, or somewhere in between. This can be a worthwhile approach, but if you do, I would highly recommend following the procedure described below. This advice comes from someone that has personally appraised literally thousands of parcels of real estate. 

 

Although prices vary, a typical residential appraisal will set you back roughly $400 - $500. It will take the appraiser the better part of a day to physically inspect your property, research property details (census tract, flood map, taxes, zoning, etc.), investigate comparables (sales and listings), and compile the written report. But let me ask you something. Do you really care what census tract your property is located in, or what flood map panel is associated with your parcel? Of course not. You want MEAT. As in, you want HARD SALES DATA - AND LOTS OF IT.

 

So, get on the phone, ring up your friendly local banker and ask them who they use for their appraisal work. Or, locate a licensed or certified appraiser of your choosing, and tell them this: "I am placing my house on the market. I want to set a price that is based solely on cold, hard facts; no emotion." "I known you are an appraiser, but I don't want an appraisal. I just want an impartial person to conduct some research". "Are you up for the job?" "Well what do you have in mind?", they reply.

 

Tell him/her that you know that a very high percentage of their job (when performing a typical appraisal), is spent inspecting the property, taking photographs, measuring the home, and compiling  basic data. But you don't need all that. You've lived in the home for ten years. You know what the kitchen looks like. You know what you're paying in taxes. You don't care what the flood map panel number is, and you have no use for census tract data. The reason that banks and mortgage companies need this information is because the lender needs to know (and see) the quality, condition, and the entire array of data previously referenced (to comply with federal regulations - things like census track data).

 

Instead, rather than have the appraiser spend hours compiling reams of useless, mundane data, you want them to focus solely on isolating meaningful transactions and active listings. In a typical appraisal, the appraiser is required to compile three closed sale transactions, and place them in the report. It is exceedingly RARE to find an appraiser that supplies more than six sales. If I had to place a number on it, I would say the average number of sales inputs provided in a report is four. Why? Because more sales inputs mean more work. And having spent hours compiling the useless data I described above, they need to wrap this up. There is another appraisal due to the bank tomorrow.

 

ASK FOR THIS.  "I would like you to provide nine (9), count them, nine recently sold transactions, and outline them in grid format (see graphic below)." The accuracy of your value estimate is directly related to the number of inputs. More inputs...more accuracy...simple as that. Why do you need them arranged on this form? Because in all likelihood, your buyer is NOT paying cash, and is financing a portion of the sale price with a mortgage. If this is the case, an appraisal will be required. And the form outlined below is EXACTLY what the appraiser will be using [Fannie Mae Form 1004].

 

It is IMPORTANT that you let the appraiser know you are not paying for an "appraisal", which has formal, technical meaning. You are paying for research, nothing more. You are smart enough to draw your own informed conclusions. Just review the nine "Adjusted Sale Price of Comparable" lines at the bottom of the form. Place heaviest weight on those properties that are most closely aligned from a physical perspective, share the most similar location, and have closed most recently.

 

By following the above referenced procedure, you have smartly employed a "hybrid" approach. You engaged expertise where you needed it, but turned back services you didn't require because they were a needless waste of money. This concept is very similar to the services of a Flat Fee MLS Listing Broker (sometimes referred to as an Entry Only MLS Listing Broker). Purchase only what you need. Politely decline the rest. Good luck!