Price Your Home to Sell
By: Judy Switzer, Broker Associate, Dallas, TX
With input from J.W. Elphinstone, Associated Press

I have blogged about pricing your home to sell before, but given the article in the Dallas Morning News this morning, written by J. W. Elphinstone, Associated Press, I felt it necessary to revisit the subject.  Whether we are in a buyers’ market or a sellers’ market, homes that are priced for sale are the ones that move the fastest and in many cases attract multiple offers, often times selling above the asking price.

A seller needs to ask himself the question, “If my home sells in the first week or two it is on the market, who has the upper hand when it comes to negotiating the price?” Conversely, if the home sits on the market for a year or more, “Who will control the ultimate price a ready, able and willing buyer agrees to pay?”

J. W. Elphinstone cites the disconnect facing sellers: The vast majority believe their homes are worth more than what their real estate agent recommends, according to www.HomeGain.com. At the same time, buyers think for-sale homes are over-priced.

In order to find the ultimate asking price, i.e. the price at which the property will sell most quickly, without leaving money on the table, the seller, in conjunction with his/her agent must analyze the market. The market may include your immediate subdivision, but it might require analysis beyond your neighborhood. In my 20+ years of representing buyers and sellers in and around Dallas, TX, I have found that when a buyer begins his/her search, they most often do not know what area of town they will decide upon. Therefore, depending on the price range, it is important you hire a real estate agent who has experience in more than one market or neighborhood. For the agent who specializes in just one area, it is very easy to analyze through rose-colored glasses.  In other words, the neighborhood specialist may view this specific neighborhood as the only choice for buyers in that price range, when in reality, buyers in Dallas have many options.

Let’s pick a price range of $600,000-$750,000. I chose that range for a very specific reason that I will explain in a minute, but the analysis is appropriate for all price ranges.  However the higher the range, the more choices a buyer has.

I chose the above range because, I believe when someone pays that kind of money for a home, public school options are less important to the buyer.  If the buyer has school-aged children and the financial wherewithal to purchase a home for $600,000+, they will typically choose the school for their child(ren) that best suits the needs of each of their kids.

Then where might the buyer consider living in Dallas, TX? In our current market, you can find homes in that range in Preston Hollow, Park Cities, North Dallas, far North Dallas, Plano, Frisco, and beyond. It is important for the seller to understand that you in one way or another are competing with all these markets. In the end, the buyer will establish his/her list of priorities, and your neighborhood will either be somewhere at the top, or not. Because you cannot control the buyer's list of priorities, all you can do is make sure you are priced so your home compares favorably to the competition in the price range, given the list of amenities your home has to offer.

It is imperative to stay on top of the competition weekly. Active homes on the market are a “moving target”.  In the Dallas market we have a central showing service with automated feedback. So if an agent shows my listing, he/she receives an email from me asking for feedback.  I find that many agents have shown so many houses that they can’t remember mine or they just say "it didn’t make the top three." While that is information for my seller, it really is not very helpful.

I follow up with a phone call and thank the agent for showing the property and ask what it was about my listing that did not make the grade. Sometimes it is something that very definitely eliminates my home from being a viable candidate like, “my client is looking for a split bedroom arrangement for a mother-in-law, and your home had all the bedrooms down the same wing”. Okay, then my listing is not a candidate for this particular buyer. However, if it is an objection that can be overcome, it is important we brainstorm as to what it would take to accomplish the objective and offer solutions as to how we could get there. For instance, the seller may be willing to give an allowance to accomplish a need/want of the buyer, with the right offer.

I also want to know if the buyer found something and made an offer, what did they choose and where? This helps me further define my seller’s competition.  Also, was the home individually owned or did the buyer opt for a foreclosure or short sale. That tells me whether my pricing is going to be affected by distressed sales in the area. As J.W. Elphinstone mentions, many short sales are in good condition and often times priced fifteen to twenty-five percent below a comparable home.

So if you need or want to sell, you have to get the price right to attract buyers. And when you get the offer, you should be aggressive with your response. When I first sit down with sellers, they tell me what they “need” out of their home. Unfortunately that is not a part of the equation. The market determines what you will get and the quicker it happens, the more the seller will net.  As J. W. Elphinstone said “The market couldn’t care less about your personal situation.”