Are you selling a home?
Then you’re like those selling anything from soup to station wagons-in one way, at least.
“You’ve got to know your competition,” says Daphne Hamilton, a broker for the Coldwell Banker real estate chain.
Ford needs to know about rivals who manufacture station wagons similar to Taurus. Campbell Soup must be aware of other chicken soup-makers. And you, as a home seller, need to check out your neighborhood competition.
“No house is an island,” says Hamilton, noting that property is never marketed in a vacuum.
All too often, sellers focus solely on their own home and the equity they’d like to take with them when they move, notes Laurie Moore, editor of Real Trends, a newsletter for the real estate industry.
But as a homeowner, your view of your property is inevitably subjective, she says. Far more objective is the home buyer who examines your place in comparison with other properties on the market.
How does a home seller who is oblivious to his competition hurt himself?
One big danger is that he’ll overprice his house relative to rivals.
Suppose, for instance, that you’re selling a ranch-style house without a garage on Pine Street. Three streets over, on Wilson Lane, Mr. Brown is marketing a similar home-but with the added advantage of a two-car garage.
If you’ve gone to the trouble to check out Mr. Brown’s property, you’ll know it’s being offered in peak condition-without the jumble of old furniture and toys that plagues the family room at your place.
Zero in on Mr. Brown’s place and you’ll also discover that the price tag on his property is the same as yours, despite the added advantage of the two-car garage.
If you’re a seller who ignores the obvious challenge posed by Mr. Brown’s property, you do so at your own peril. The reality is that Mr. Brown is almost certain to sell his home before you do. And, unless you lower your price, your house will actually help Mr. Brown convince a buyer that his home is the better of the two at the price offered.
“If you’re interested in a quick, comfortable, profitable sale, you should never underestimate your competition,” says Hamilton, who serves as a vice president for the Women’s Council of Realtors, a professional association based in Chicago.
Here are pointers on how to size up your competition:
– Don’t assume that your agent is the only one who needs to know about the competition.
“A top-notch agent will probably educate you about your competition,” says Moore, the co-editor of Real Trends.
Still, selling a home is a cooperative venture between agent and owner. And, as Moore points out, the ultimate decisions on how to price and present the property ultimately fall to the owner, who has the keenest interest in the outcome.
Would you relinquish all control of your portfolio of stocks to an investment broker? Or would you think it more prudent to season the stockbroker’s advice with your own research on the companies you are buying and selling?
Just as an investor can benefit from his own research, so can the home seller, Moore insists. “Information gives you power.”
– Tour other properties as a buyer would.
To get a comprehensive look at your competition, Moore suggests you personally tour three properties on the market in your immediate neighborhood (through open houses or appointments arranged by your agent). Plus, she thinks you should look at two new-home communities nearby.
Why compare your property with new construction? Because the reality is that your buyers will be doing just that. All things considered, many Americans prefer a brand-new home because it’s fresh and probably offers more amenities. A builder can also offer financing packages to ease the cost of entry.
Can you afford to price your home at the same level as a like property that’s brand new? Probably not, says Hamilton, the Coldwell Banker broker. Indeed, she thinks most homeowners should list their properties at least 5 percent under comparable homes that are new.
– Be realistic in comparing your property to rival homes.
No two homes are exactly alike, of course. So you’ll have to make adjustments in contrasting the pros and cons of your home and a rival’s.
The mistake many home buyers make is that they give themselves more credit than they should, especially for basic improvements or custom features, Hamilton says.
Did you install a plusher grade of carpet than did the builder around the corner? Then don’t pad your price because of that, because most buyers will be indifferent to the distinction.
And don’t even consider adding to your list price for routine upkeep and maintenance. You may have put out thousands more than your neighbor for a new roof, heating or air conditioning system. But a buyer is not likely to distinguish between the two houses on that basis.
– Remember that market competition is a fluid situation.
Were you offering the best deal in the neighborhood until Mr. Brown, with the two-car garage, listed his place for the same price as your house, which lacks a garage?
Then an immediate price cut is in order, Hamilton says.
Calculate the estimated cost of adding a garage to your home and remove that much from your asking price, she recommends. Don’t wait until the Brown house sells.
