Every seller wants to net as much as possible from their transaction. Regardless of other motivation, the bottom line is always at least part of the conversation. Squeezing every dollar from the sale starts with finding the right list price. By listing too low you may be leaving money on the table. Conversely, if you list too high you run the risk of scaring away buyers who see better deals in their market. While there is no true formula for determining list price there are indicators that act as a guide. Between recent sales, current listings and market activity we can figure out the right number to list at. Here are the four main indicators for finding the sweet spot for list price.
Price. If there was one factor that held more weight than others it would have to be price. When evaluating price, you need to look for the final sales price rather than just current listings. The more recent the transaction the better the comparable. The real estate market is fluid and can change quite a bit over a 90-day period. A sale one week ago is a more accurate account of a market over a sale from last season. You can also look at total sales data of the last 90 days to get an idea of where prices have gone and where demand is headed. Price is a good indicator, but just one of the pieces of the listing puzzle.
Proximity. A sale six miles away may not be a good representation of a market. Blindly looking at property transactions within a zip code can be a recipe for disaster. If you drive even a mile away from a property it may be a completely different market. That is why the closer the transaction is to your property, the more reliable the comparable. Proximity alone doesn’t mean you will be close in list price, but if all other things are equal it can be the best comp you have.
Likeness. Here is where evaluating a property can get a little tricky. A two-bedroom sale just over a mile from your house may not be much of a comparable for your three-bedroom listing. A colonel is not the same as a cape and a ranch is not comped the same as a condo. As much as two properties may be similar, they are very rare the same. There are almost always differences in style, square footage, bedroom count and acreage. Out of these bedroom count and square footage are the two biggest indicators but there is no set formula.
Amenities. It is difficult to put an exact value on amenities. The biggest reason is that some amenities are more important to specific buyers than others. A built-in pool holds appeal, but some buyers see it as a burden rather than a luxury. An updated kitchen is nice, but some buyers may want to put their own stamp on the property and aren’t willing to pay a premium for the work. Items like a fireplace, central air, driveway and garage can improve your list price but you need to be careful not to overplay your hand.
There are also important considerations like average days on the market, demographics and good old supply and demand that come into play. What is not disputable is the importance of listing at the right number. Instead of coming up with a number out of thin air you should listen the advice and diligence of your real estate agent to come up with the best number for your property.