"Valuations: The Price Puzzle"

I read this great article in REALTOR® Magazine and wanted to share it with you, because if working behind the scenes in real estate has taught me anything, it's that valuation is one of the most important and tricky steps in the home selling process. So for those of you who are new to this whole process, there are several things you'll want to keep in mind when determining the right price for your home.

PRICE v. VALUE
First, you have to understand the difference between price and value. Two homes might have identical prices and similar specifications, but there are a number of factors that could make one home sell faster than another.

The best way to assess the value of your home is to be familiar with the competition. Your REALTOR® should provide you with a CMA (comparable market analysis). This report gives you a better idea of the value of your home based off things such as: other listings in the area, your home's features, location and more and allows you to compare those to similar listings in the area.

It's your REALTOR®'s job to help you price your house correctly. This person is the industry expert, so although you may have one price in mind, make sure to listen to the professional advice you're receiving. You hired a REALTOR® for a reason, after all - to help you sell your house. Being stubborn about price after your agent recommends a reduction is only delaying the process and keeping him or her from performing their duties to the best of their ability.

REPRICE, EARLY AND OFTEN

The ideal goal is to have your house priced correctly when it first comes on the market. However, this isn't a one-time task, especially in a changing market. You'll need to stay abreast of changes - new listings, recent transactions, price adjustments, etc. - that could affect the perceived value of your house. Make sure you and your REALTOR® review your listing at least every 30 days - more often if there's a lot of transaction activity. 

Don't let a listing languish at the wrong price! Chances are when your starting price is optimistically high, you'll receive less interest on your home, and it will stay on the market for as long as it takes to find an attractive price for buyers (costing you more money to keep your home for a longer period of time). Buyer's agents know when they see an overpriced listing and will advise their client to lay low for a few weeks until the price is lowered. BUT if you price correctly from the get-go, your listing won't get skipped over by buyer's agents and you'll get the excitement you wanted and hopefully, an offer to buy. Remember, your best change for a full-price offer comes in the first three weeks.

Source: REALTOR® Magazine - "Valuations: The Price Puzzle"