Colorado Real Estate For Sale | Pricing as much art as science

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Colorado Real Estate For
Sale | Pricing as Much Art as Science

Pricing property can be more art than science in some of today’s markets. New homebuilders probably have the easiest time of it at least without shocking the buyers — because everything is new. There are no bare areas in the carpet, fingerprints on the appliances, nicotine stained ceiling tiles in the entertainment room and definitely no cat and dog odors that are promised to be dealt with by installing new carpet after the buyer moves in.

With resale homes, the first weapon to use in the battle to sell the home is to price it correctly. The challenge for sellers is that they want as much as the last sale, however, in today’s market that’s not as guaranteed as it was a year ago. The seller can still walk away with hundreds of thousands of dollars in gain, but maybe not the absolute highest amount of gain ever in the community.

Thus, pricing is the key. There are only a few ways to price a home for sale and sellers who don’t want to wait around on the sale of their home need to adapt to the accepted modes of pricing and get over the fact that their house may not be worth as much as it was 12 months ago.

The first model is probably the most popular the comparable market analysis more commonly referred to as the CMA. By pulling up only the sales of your particular model, your Realtor can determine a trend price for your home. The challenge in a slowing market is that your particular model may only have three sales in the last year. Such a low number of houses selling does not really create a trend line, especially if the last sale was 6 months previous. Thus, you turn to the second pricing model.

Your home is then dissected to create comparables across a few neighborhoods or even a whole zip code that match your local community. Several aspects of your home will be plugged into the comparable model: style of home (split level, colonial, etc.); number of levels; number of bedrooms and baths; extra rooms; year built; square footage; and more. Then the averages on these parameters are tabulated and you’ll have a target price. Keep in mind to remove the highs and lows.

Finally, another way to price your home is to come up with a tax assessment model. This one takes a little bit more homework and data mining. It’s tedious, but it can present an accurate picture of home values in your community. The first step is to pull up all the sales in the community in the last 6 to 12 months. Tabulate the sales price total (let’s say it comes up to $10 million) and then tabulate the tax assessment total (our model will use $8 million). Divide the tax assessment into the sales price and you come up with a tax assessment-sales price ratio. In this case, the community ratio is 1.25. Multiply your tax assessment by the ratio figure, and it will determine your target asking price. For example, if your tax assessment is $250,000, multiply it by 1.25 and you’ll arrive at $312,500 as a target asking price. Again, be careful to pull out the anomalies that represent overbuilt properties. The largest, biggest house in the community could affect your price, as well as the pre-foreclosure sale.

You’re looking for average prices with average situations for average results.

The biggest challenge in pricing the home is a seller’s greed level. Sorry to be so blunt, but sellers always want more than the last sale, regardless of the market condition. My blunt advice is to “get over it.” Waiting around for the “right” buyer is just plain foolishness in the world of real estate. If you’re putting your home on the market, don’t wait around and waste your time, the buyers’ time and the agents’ time with an unrealistic asking price.

If your Realtor provides feedback from colleagues that your house is overpriced, move on it. Move from denial into acceptance and price the house right. Remember, the goal here is not to price the property as high as possible, but to sell the house.

Tom Reed and Bill Brown are local authors and real estate experts of Legacy Real Estate Brokers Inc. in Denver Colorado. You can visit their website at www.discovercoloradorealestate.com.

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Pingback by Foreclosure » Colorado Real Estate For Sale | Pricing as much art as science

2007-11-08 22:08:04

[…] unknown wrote an interesting post today onHere’s a quick excerptTom Reed and Bill Brown are local authors and real estate experts of Legacy Real Estate Brokers Inc. in Denver Colorado. You can visit their website at www.discovercoloradorealestate.com. […]

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Pingback by art price and art information

2008-07-08 04:09:13

[…] the suggestion from my Realtor on the proper pricing for our listing. Thanks for the informativhttp://rismedia.com/localnews/denver-colorado/2007/11/08/colorado-real-estate-for-sale-pricing-as-mu…artprice.com, the world leader in Art market informationartprice.com, the world leader in art market […]

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