Pricing a Property: What's Its Value?

Determining a property’s value is a somewhat ambiguous process. I often work with clients, both selling and buying homes, who come from a scientific background. I genuinely appreciate data-backed decision making; I have been married to an engineer for 25 years! It would be so convenient to plug in a price per square foot for a home in a particular area, but it is not that simple.

As a real estate agent, my determination of a home’s value is really an interpretation of the market demand for that sort of property.  So how do I do that? I do look at sold properties in that area. First properties of like style are considered, then I look for homes on similar streets (a familiarity of the area and having been in some of the homes is needed for this). From that group, I find the homes that have similar attributes such as bedrooms, baths and square feet of living space. Next I consider factors such as: proximity to public transportation, views from the yard or deck, privacy of the lot, layout of the floor plan, how the home is updated, construction materials used, proximity to services and shopping, the school and school district's reputation, location of the schools, whether other homes in the neighborhood look similar in size and upkeep to the property being considered, plus more! 

Pricing does get unscientific as some point. The value of working with informed real estate agent is getting that opinion of what is a good value in the area. My goal is to help buyers select properties that serve their needs, that can also be sold if in the future. When I help sellers price their properties, it’s all about knowing what properties have recently sold and pricing a property relative to current market listings. So, determining a property’s value is a blend of data analysis, familiarity of the inventory, and an understanding what consumers are drawn to currently.

Adventures of the For Sale by Owner Kind

Ok, for whatever reason, For Sale by Owner properties have cropped up a lot this week. As I brought one client to see one, his summation of the experience was, “OMG, why would anyone ever do that? And you’ve got to write a play about FSBOs.” He has a point.

My heart seriously goes out to hard-working, well-intentioned home owners who want to go it on their own. However, with realtors access to information and ability to reach both buyers and realtors who WANT to work with them, a home owner just cannot keep up.

Some thoughts to consider:

Realtors bring in home sale prices at 6% higher than FSBOs do. Even with paying a commission, the owner nets more from the sale.

Realtors prefer to work with realtors.  People in the business know the legalities of what must be shared, when various documents must be produced, and how to keep a transaction on track. Rarely do I see an owner seller even providing the most basic documentation from the beginning.

Owners may be comfortable showing their home, but buyers are usually not. When a buyer is shown a property with a realtor, the realtor can help interpret how features add to the value of the home.  A realtor may also field questions a buyer may have that would never be addressed face to face with a owner. Let a realtor share unbiased facts to help a prospective buyer understand how to address challenges they see in a property.

Screening prospective buyers and security are other factors to consider. Realtors work with buyers that are pre-approved by a lender and are truly prepared to purchase a home. Working with a realtor, sellers have the best of all situations with data on who has entered their home as well as unrestricted ability for realtors to schedule showings online.  Sellers don’t need to sit by their phones and get realtors with buyers have access.

Feedback is yet another consideration.  Realtors receive feedback on the property from other realtors that show it and sometimes realtors from their firm.  Buyers are often shy to share true feelings about the property, leaving for sale by owner sellers wondering why their sales efforts are ineffective.

Lastly, profession marketing is key. There’s so much more than putting a property on MLS. There are firms that will help for sale by owners to put their property on MLS, but what does not happen is all the listing being featured on syndicated sites and being shared with colleagues in the agents office. Not all realtors or realty firms are equal in doing this either. Marketing at the home is rarely done as well either—realtors have professionally made flyers and notebooks to create a polished presentation at the property.