Looking for a quick sale?

Then you need to make sure that the price is right

By GENA JEROZAL, Special to the Times-Union

When it comes to pricing a home, the single biggest mistake most people make is "focusing on what's for sale, not on what's sold," said Kim Knapp, president of Vanguard GMAC Real Estate.

"It doesn't matter what price people are attempting to sell their homes for; what matters is what price consumers have already been willing to pay for those homes," Knapp said.

Top-selling Watson Realtor Kent Mitchell agrees.

"When all is said and done, the buyer and the appraiser truly determine the right selling price of a home," Mitchell said. "What the buyer is willing to spend sets the value of the property, while the appraiser makes sure the buyer is not paying too much."

Of course, it's not as simple as that because there are many factors to consider when setting the price of your home, such as location. And setting the right price as soon as your house hits the market is critical to selling it quickly and for the best price.

"The first 30 days your house is on the market is the most valuable time," Mitchell said.

"It's a brand new listing so there's a sense of urgency [from potential buyers] to see it," Vanguard's Knapp said. "That's when you'll get the most traffic and interest in your property. If you price it too high initially, you've missed your best opportunity. Reducing the price diminishes the perceived value of your home and makes buyers think they're dealing with a more desperate seller."

Another strategic mistake in pricing your home is to rely on a price per square foot figure to determine the value of your home.

"You can't just look down your street at the homes that have sold and figure out the price per square foot, and then multiply that price by your square footage to arrive at your sale price," Knapp said. "There are other factors involved, such as the features in the home including granite countertops, wood or ceramic tile floors, and lot location, architectural interest like pillars and plant shelves and utility."

Utility is another way of describing the livability of a home and can include the number of bedrooms and the layout and flow of the house.

Overpricing a home indicates that the seller thinks the home is worth more than the market will bear. That happens most of the time because the owner is too emotionally attached to the home.

"There's a cartoon that shows the various perceptions of a house. The homeowner sees a mansion; the bank, a shack," Mitchell said.

While the different perceptions are usually not that drastic, the cartoon makes a good point. Just because you think your house is amazing doesn't mean a buyer will.

"Some people tend to look outside their own area when determining the price tag for their house," Mitchell said. "Even if two houses appear to be very similar, the one located at the beach will likely be more expensive than one located inland."

Mitchell averages a 98 percent list to sale price, meaning there are very few houses he hasn't priced right -- in other words, at the fair market value. And of those remaining 2 percent, it's usually because a seller insists on an inflated price.

"Usually when something doesn't sell in this market, it's because it's overpriced," Mitchell said.

That is why it pays to obtain a Comparative Market Analysis, or CMA, as well as an appraisal, when determining the price of your home. The CMA takes into account the amount received from recent sales of comparable properties and the quantity and quality of comparable properties.

"Inventory counts," Mitchell said. "It's supply and demand. The smaller the supply of houses for sale, the more demand there will be for each of those houses, which will cause the price to increase."

Conversely, if several houses are for sale in your neighborhood, then it's vital to price it correctly to stay competitive.

The CMA is not an exact science. However, it is a thorough approach to determining the right price.

"While we can start an analysis by figuring out the price per square foot of recently sold homes within a 1-mile radius of the property that is being prepared to be put on the market, it's only one component we compare," Mitchell said. "We also consider things like the age of the roof, if it's brick versus stucco, whether the countertops are made of granite or laminate. All these things go into the final estimate of the price of a home."

Knapp notes that there is a big difference between the CMA and an appraisal.

"With appraisals, you get a specific number for the home and if you get four different appraisals, you could get four different numbers," Knapp said. "The CMA comes up with a price range based on a few factors: the location and features in your home and the estimated time on the market. For example, if you have upgrades, the right lot and all the features consumers are looking for, you'll probably get the higher end of the range for your house. If your home is in the top price range in the market, you'll have the smallest percentage of potential buyers available and, thus, it will be on the market longer. If it's in the mid-price range, you'll have the most potential buyers and a shorter time frame from list to sale."

Pricing too low can be just as detrimental as pricing too high.

"We've already explained how listing your house at a price that is above the market value causes sellers to miss out on prospective buyers who would otherwise be prime candidates to purchase the home," Mitchell said.

But, just as important is not pricing the home too low.

"If you list at a price that is below market value, you will ultimately sell for a price that is not the optimum value for your home," Mitchell said.

Mitchell recalled just such a case. "A couple who lived in their house a long time didn't realize how much it had increased in value, so they sold their house for $30,000 less than they could have because they don't have the tools that I have to conduct proper research to determine the proper price," Mitchell said.

The bottom line is that if you price your home too high or too low, it will cost you in time and money. Being realistic, not idealistic, about the value of your home, is the best way to sell it at its maximum price and in a reasonable amount of time.