Pricing a home is tricky in any market, but more-so in a market like we have right now. In today’s market, if the home is priced well, it will sell quickly. The good news for sellers is that buyers are not shy about bidding over the asking price. However, if priced too low, you may simply get too many offers — like a recent property in Pacific Heights that received more than 35. That sounds wonderful on paper, but it really doesn’t serve anyone well. It takes the seller and agent quite a lot of time to sort through all of the offers, and all but one buyer will end up disappointed. Of course, if priced too high, a property can sit around for a while even in this brisk market. So what is the best approach to pricing?
Ideally, your agent will come to your home, possibly with some colleagues, to evaluate it for pricing. They then go back and look at comparable sales and make a plus/minus analysis comparing the features of the home against the comparables. This will enable the agent to develop a pricing strategy and recommendation. Most agents try to price the home at market value and then let the offers come as they may. The plan is usually to expose the home to the market for a given period of time and set an offer date. The agent will be able to judge, by the interest level and number of disclosure packages given out, approximately how many offers the property might receive. Of course, this is only a guess. We figure about one offer for every two or three disclosure packages requested. Sometimes it is more and sometimes less, but this seems a good rule of thumb.
What about preemptive or off-market offers? With increasing frequency, homes are being sold before they appear on the multiple listing service, for everyone to see. Why? There are a lot of qualified and cash buyers in the market today, and many of them are tired of not getting the winning bid. In some cases a seller will take an off-market offer if he or she feels it is high enough — and that typically means more than both the seller and agent feel it will fetch on the open market. I call it a “buy-it-now price.” I recently had such a sale, and the seller was delighted — didn’t have to spend a lot of money getting the home prepared for sale, and didn’t have to keep it “show ready” while on the market. It was truly a win-win situation.
Why are homes selling for over asking? Well, that’s easy to explain. Supply is low and demand is high. This creates multiple offers. As I explained in my May column, buyers simply have to be prepared to make clean, aggressive offers over the asking price. Until supply increases or demand lessens, we will continue to see this happen. The experts think this will continue in San Francisco for a few more years.
Now, what if a home is not selling? Even that can happen in this crazy market.
The answer is usually price, and it is possible to price your home too high. Sometimes it is overpriced because the seller “assisted” in the pricing and wants more than it is worth, or it’s a number that’s simply too high to attract offers. Sometimes the agent may not be familiar enough with a given neighborhood, and may not price the property properly.
In any event, if your home is not selling, I would suggest that you and your agent review the pricing process, look at any new comparables, find the most recent sales data, and then adjust the price accordingly.
Of course, there may be other issues with the home that prevent it from attracting offers. It might be the home itself or even the neighborhood. Regardless, it ultimately always boils down to price. Any property will sell at the right price. Your agent will help you determine a good price for your property, but at the end of the day, the market will always have the last word.