I just saw an interesting video of a Pasadena real estate agent describing the process that his team uses in pricing a home to sell. The real estate agent shall remain anonymous here, but having watched the video, I was petrified in what consumers, home sellers that are relying on the real estate agents to price their homes to sell, think. As the saying goes - "perception is reality!"
In the real estate video, the home pricing process went something like this:
Real estate agent #1 - "We need to price this Pasadena home. This home doesn't show well, has a lot of deferred maintenance and really doesn't compare to any recent solds on the street." Turns to his partner and says "What do you think?"
Real estate agent #2 - " I think we price it at $649,000"
Real Estate agent #1 - "How can you justify this home sales price of $649,000 when other homes, in better condition, on same street sold for the same? I think that it's worth around $540,000"
Real estate agent #2 - "If we start out low and this home doesn't sell, we will not have room to go down in price!"
Real estate agent #1 - "Let's table this and address when we meet at the property later."
Several days later, both agents meet at the home that they are getting ready to list.
Real estate agent #1 - "So have you given any more thought to pricing this home?"
Real estate agent #2 - "Let's price this Pasadena home at $579,000 - just split the difference."
Real estate agent #1 - "Great idea!"
Shall I say more? I know that the home sellers that I work with rely on me, their Pasadena real estate agent, to do my due diligence and come up with a price that will not only help them sell their Pasadena home or condo, but also sell with the highest possible return to them.
So what goes into the decision process of pricing a home to sell in today's real estate market?
First of all, what you think a home will sell for and the price the home is presented for to the buyers are two totally different things. Pricing is yet another strategy or tool to use in selling your Pasadena home.
The saying in the real estate industry goes something like "pricing is 80% of the sale". That is very true. If a home seller overprices their home, it'll just sit there, get stale and ultimately result in a much lower selling price.
If a home seller drastically underprices their home, it'll sell fast, but will it sell for top dollar?
Should a seller "fix price" their home? Or, should a home seller "range price" their home?
What kind of homes are selling in their immediate neighborhood? What are the home's competition? Will these homes help sell your home or will your home help sell these other Pasadena homes for sale?
What was the last home price sold, price per square foot, condition of the home in the Pasadena neighborhood that the house is in?
What is the absorption rate for Pasadena and specifically the neighborhood that the home is located in?
What are the trends in the real estate industry?
How will the price help drive home buyers to see your home? Will the house's price deter potential home buyers from looking at your home?
Does the condition of the home support its price? Has the home been staged to support a higher selling price?
There are so many questions to ask and address before deciding on how to price a home correctly! It's not as simple as "let's look at the comps and come up with something in the middle."
If you are a home seller and see a video like the one I referred to, please know that not all real estate agents are created equal. Interview your real estate agent and demand the best!
