It was a striking traditional home of burnt-red brick with a sunken living room and a 600-square-foot family room. But the house sat on the market for four months without attracting a single offer.
Was it overpriced? Not when it first hit the market. The doctor who owned it had priced it at the top of the customary range of like homes.
But late in the listing period, market conditions deteriorated. And by the time the doctor was willing to drop to the lower end of the price range, home shoppers in the area had grown suspicious that something was seriously wrong with the place.
Ultimately, the doctor faced two tough choices: He either had to drop his price below the usual price range, or pull the home off the market. He chose the latter option.
“The median price is usually the best place to be,” counsels Linda Cutter, who sells homes through the Re/Max chain.
To be sure, there are exceptions to the “median is best” rule.
You may be able to price yourself on the high end of the range if there are scarcely any homes available in your market. Ditto if your home is located in a coveted section of a highly prized neighborhood, if it’s in tip-top condition, or if it sports features that represent “hot buttons” to the public.
Better go on the low end, however, if your home is a Plain Jane property floating in a sea of “for sale” signs, or if there’s something unpleasant or unpopular about the way it’s situated.
Here are pointers on pricing:
– Use current statistics to figure out the prevailing price range for your home.
Markets are dynamic.It may be that an exact copy of your Spanish-style contemporary sold for a princely sum six months ago. But much more relevant is what happened within the last three months.
Cutter suggests you ask your agent to gather current statistics, not only on sales that have closed but also current asking prices.
“Look at the trend in showings and prices,” she suggests.
– Recognize that a “price range” is a wider swath for upscale properties.
The breadth of price ranges is quite variable, depending on the scale of the housing involved, says David Farrell, a branch sales manager for the Coldwell Banker chain.
If homes in your neighborhood are in the lower half of the range for the metropolitan area as a whole, price ranges are $5,000 to $10,000 wide, Farrell says. But if you’re in the upper half of the market, count on ranges of $20,000 to $30,000 or more.
– Remember that “great location” is a tough standard to meet.
You could be justified in going above the median price if your home is near a valued body of water, such as a magnificent lake or river setting, Farrell says. Golf course sites are also treasured, even for buyers who play no golf.
You may also be able to go to the high end if you border on a “conservation zone” consisting of greenery that is guaranteed to remain untouched. (Tree-huggers are becoming more prevalent.)
A quiet and traffic-free cul-de-sac location is valued by those with small children and pets. And a close-to-town location, with ample public transportation, is valued by those with older children whose parents want to be spared some of their chauffeuring duties.
– Be careful how you value “extra features” in your home.
Yes, some features are big draws for today’s buyers. You may be justified in going to the top of the range if your house has a self-contained “in-law” suite or a fifth or sixth bedroom that could function as a home office, Fared says.
The same is true if you offer a bona fide “media room,” which is typically a large area with high ceilings designed for the use of a gigantic TV, along with a high-quality sound system. Such media rooms are often located above a garage.
“Media rooms are very hot. We’ve had a number of buyers who had trouble finding a home because they couldn’t find one with a media room,” Fared says.
What doesn’t justify going to the top of the range are personal upgrades that lack broad appeal, such as designer shingles on the roof or unusual ceramic tiles on the walls or floors.
– Price at the low end if you’re in a rush to sell, have problem neighbors or face many rivals.
Urgency is a very important factor in pricing, says Cutter.
You should price your home in the bottom quarter of the prevailing range if you wish to liquidate it in 50 to 75 percent of the typical selling time for your area. (To define “typical selling time,” ask your agent to generate figures on the average number of “days on market” of homes that have sold in your neighborhood recently.)
You should price low if you live near other homes with peeling paint, junk cars in the driveway, out-of-control shrubbery or other evidence of neglect.
And you should also price low if you face a sudden swarm of competitors with houses very much like yours. Coming in even a notch below the pack–as little as $1,000 less–can sometimes make a big difference.
– Remember that overpricing is basically self-sabotage.
Overpricing means either coming in at the high-end of the price range, when doing so is unjustified, or going over the top of the price range for any reason.
In truth, overpricing your house is actually like performing a service to the competitive property around the corner. Buyers will look at both homes, and your high price will simply serve to make the other fellow’s price seem reasonable, Cutter notes.
“You’re never going to hoodwink a buyer. Today’s buyers are much too smart for that,” she says.
