The real estate market has been strong over the last several years especially here in Athens. We have seen the supply and demand graph tilt way towards demand and home values appreciate quickly. This has been great for homeowners but stressful for buyers. And like I have said many times, “Trees Don’t Grow to the Sky”. At some point, the appreciation will slow down and I think we have seen that happen in some parts of our market. On the other hand, some areas are still growing rapidly in value. I have seen two examples recently of pricing in my business and I want to go over them best I can to offer some insight.
Example 1: Pricing Aggressively but Correctly
This past summer I had a property listing that was one of the nicest homes in the subdivision. Cul-de-sac lot, high end finishes, 5,000 square feet, and a full basement. However, this neighborhood was low on sale comps and the home sizes varied greatly as well. There were only two comps in the last 14 months and neither of them were very comparable to my listing which made pricing very hard if I was going to help my client get top dollar. To do my job well, I needed to dig further and look outside the immediate neighborhood. Once I did that, I began to realize we could justify a price well over $100,000 more than the most recent sale. Once we hit the market, I got immediate feedback from a colleague with clients that loved the house. This realtor, who has lived in Athens less than two years by the way, had clients moving from up north and they didn’t see any way the home was worth so much. What was even more frustrating is that the other agent kept explaining the comps to me from down the street and even emailed me MLS listings from the area. Think about that for a minute. Do you really think, I am going to get that email and say, “Geez, you know what? Your right! I didn’t think to look at any sale comps. I am a total idiot. I will call my clients and tell them to drop the price immediately.” Surely you can sense my sarcasm. I love it when three people not well versed in Athens or our market explain property values to me. It reminds me of an old Lewis Grizzard joke where he told the fellow, “The second you start telling us how you did it up in Cincinnati, Delta will be ready and waiting to take you back”. Long and short, we told them to go pound sand. About two weeks later, we found our buyers who loved the home and understood its value. We sold very close to asking price and the appraisal even came in $5,000 over the contract price making the buyers happy, the sellers happy, and the neighbors happy with the adjusted home values.
Example 2: Pricing Too Aggressively
Now that I have bragged on myself, I will give myself some criticism as well. Pricing is tricky and you need to do it right or risk missing your buyer. This past year in another area of town I let a client price a home too high. I am just as guilty for going along with it, and I have vowed to never let it happen again. In the beginning. I had reasons to agree to it, but I will never make that mistake again. Pricing this one too high cost us maybe two or three buyers, and ultimately the price had to come way down to find a buyer in the end. In hindsight, I should have refused to take the listing at anything higher than my original price recommendation. Unfortunately, I had to chalk this one up to a mistake and a lesson re-learned in real estate.
My point here is that pricing might be the most important part of selling your home. Nowadays, thanks to Zillow, social media, and technology in general some people seem to think they know more than they actually do in reality. In some cases, large corporations and companies seem to think they can make realtors obsolete or irrelevant in 5 to 10 years with use of apps and sight unseen offers. But try to remember this simple premise. “You don’t know what you don’t know”, and if you don’t work full time in real estate there is plenty you might not know or understand in the market. So, find someone you know and trust in real estate to help you. If you choose wisely it will make you more money, not COST you more money.