Property Pricing Tips
By Holly Mabery, ABR, GRI, PSA, rCRMS, RSPS, SRS, Arizona REALTORS® 2012 president
When pricing a property, keep these tips in mind:
- Value and Worth are two different things, but rely heavily on each other. Value is what a buyer is willing to buy and the seller is willing to sell. That’s the value. What a property is worth takes the value established by the buyer and seller and supports it (or does not) with market data and facts.
- Condition will impact value. If a property is run down (peeling paint, torn carpet or no flooring) compared to a property that has been well maintained and is move-in ready, condition goes to the heart of what a buyer will pay. Most buyers will pay more when the property is in good condition and turnkey. The more the buyer has to do after they purchase, the more likely the price goes down.
- Location! Location! Location! The old adage is still true. Just ask anyone who lives close to where a Trader Joes or Whole Foods has been announced or built. Typically, prices in those neighborhoods begin to rise, in some neighborhoods as much as 40%. This would also be true if you back to forest service live in a green belt or easy access to desired recreation areas.
- It has to be Apples to Apples. When pricing a property, compare a single story to single stories, a two story to two stories. Always consider the anomalies of a property; if it has a pool, find at least one recent sale with a pool. The same would be true for a guest house/casita, out buildings, or specialty garage.
- There is not always a Dollar-for-Dollar Return. This is probably the hardest thing to relate or share with a client. If they spent $20,000 on engineered hardwood for their floor, it’s beautiful, but most buyers don’t see $20,000 — they see a wood floor.
A $40,000 saltwater swimming pool may be amazing, but the buyer and appraiser will only see a pool and could see it as more of a liability than an added value. Items that add value can be a kitchen remodel or bathroom addition. Usually, general maintenance items don’t give a dollar-for-dollar return, but may help with time-on-market and requested repairs after the fact.
If you’re looking to dial-in your pricing strategy and take it to the next level when working with Sellers and Buyers, definitely check out the Pricing Strategies Advisor (PSA) certification from NAR. This one-day class (or two, one-hour webinars) gives you hands-on opportunities in pricing and working with peers to come to a value that will sell.Tags: Holly Mabery, how to price a home, how to price property, pricing, Pricing Strategies Advisor, PSA