When selling property, how do you know the price is right?
Go beyond standard market analysis for best results
For the past several years home sellers have had a definite advantage in the Denver metro area, but lately we’ve seen that dynamic begin to change. A clear sign is that more sellers are accepting offers below their original list price or we’re seeing price drops in the first few weeks. In this current climate it is essential to get the price right the first time since your best opportunity is within the first few days your property is on the market. If you’ve hit the mark just right, you have a very good chance of selling your home quickly and at full price.
The key is to do your homework. There are several avenues such as online sites and comparable sales, but there’s more to it than that. List prices are usually based on the prior six months of sales; however, in a changing market that information can quickly be outdated. The following scenario illustrates how good old-fashioned footwork can help you achieve a price above what the market would suggest.
We represented a home that we had under property management for several years. The seller was on the fence about whether to keep renting it or to sell when the current lease expired. As we have done with several owners in the past, we prepared a CMA (Comparative Market Analysis) using the established methods. We presented it to the owner but the general feeling in our office — a feeling also shared by the seller — was that it seemed a bit low, even though we’re aware that we are in a softening market. We decided to do some further research.
In the meantime, we kept the house available on the rental market and had some interest and a few offers. While the owner was deliberating the pros and cons of renting vs. selling, we kept working on the sale price. There were very few houses like hers on the market in her neighborhood, so we decided to visit each one and compare the amenities, finishes and price per square foot. What we found confirmed our original thinking — the CMA did not accurately portray the actuality of the current market.
We went back to the owner and told her that based upon our research of what was currently for sale, we felt strongly that she could get 5 percent more than what the original CMA suggested. Considering that this home was projected to sell for around $1 million, this news motivated her to move ahead with marketing the house for sale. It went on the market on a Friday afternoon and by Sunday she had three competing offers. It was under contract by Monday afternoon.
As the saying goes, all’s well that ends well. The seller walked away happy. She was thrilled with the price since she had expected to get much less. The buyers were ecstatic as they had been looking for over a year for the right property to suit their needs.
The take-away, which seasoned agents already understand, is that in a level market a CMA is usually a good predictor of sales price, but in a rising or softening market a CMA always needs to be thoroughly vetted. It pays off (literally) to go the distance and do additional research on a property to decide the best selling price.
Holly Toenjes is the president of InTransit Properties and recognized as a seasoned leader in the Denver-area real estate scene. Well known to bankers, investors, buyers, renters, sellers and the business community at large, Holly possesses an uncanny ability to asses virtually any given real estate puzzle – and solve it effortlessly. She has sat on a number of business, philanthropic and artist boards and currently invests in and navigates a wide variety of real estate transactions from luxury properties to condominiums, to mountain homes to the rentals.