This week’s Q&A column is written by Ann McClure of McEnearney Associates Realtors®, the leading real estate firm in Alexandria. To learn more about this article and relevant market news, contact Ann at 301-367-5098 or email [email protected]. You may also submit your questions to McEnearney Associates via email for response in future columns.
Question: What’s in a number? “Value” vs. “Price” when selling a home.
Answer: A lot of thought and careful analysis! Determining a list price (which ultimately leads to a market/sold price) for selling a property and determining its value are not the same. Let me explain — hang in there, this is a little bit of a bumpy ride…
Determining list price is a strategy — after thoughtful analysis of the value proposition of a particular home, seller motivations and the state of the market, a seller might decide on a specific list price in order to drive a particular end-result. List price offers a strategy for arriving at the market price — or, most probable price at which a home will ultimately sell.
After analyzing the value (and maybe the competition), market price is the amount a “ready, willing and able,” buyer will pay and a seller will accept. Determining property value means taking a careful look at the benefits a particular property offers, its condition, updates and improvements and specific location. It requires a keen look at how a property compares to others within its marketplace.
Consider a home that backs to I-66 or the VRE tracks — it will not have the same perceived value as a very similar counterpart three blocks deeper into the neighborhood and as a result may be priced lower. What about the family going through a crisis that has a motivation to sell quickly, to get out of a particular hardship? Their list price strategy may be to price low to get the home to sell swiftly or to entice a bidding war, luring a buyer to buy without a home inspection or maybe even an appraisal.
Conversely, what about the retired Admiral who is so used to keeping his or her surroundings “ship shape,” that the exterior paint is perfect, there’s not a blade of grass out of place nor a pesky shutter askew — every update that can be done is done and it’s the gem of the neighborhood. This home offers lots of value for its list price, reflective of the level of updates and maintenance. It may yield a new high water mark for the neighborhood because the value is perceived to be so high.
A wise real estate agent once shared this bit of wisdom: Buyers need to see the value for the price they are paying — and, if they don’t see that value, in order to sell (and not sit), something must change… The list price (what a seller is asking) and the perceived value (what a buyer is getting for the price) need to be congruent.
If they are not, a downward price adjustment may be necessary and/or some action to remedy the perceived lack of value (such as updating the kitchen appliances, replacing the HVAC system or installing a new roof).
Even in this market, where inventory is so tight, buyers expect certain value for the price… They may want freshly painted “griege” walls, shiplap and a new open kitchen (thank you, Chip & Joanna!). These items represent value in their minds and that value drives the price.
For instance, I recently listed a home with no central AC that was also on a fairly busy secondary road. The sellers and I decided on a list price $20,000, or so, lower than where the comparable sales were to compensate for these negative factors. Our strategy was to offer such a good value for the price, that buyers would connect emotionally with the property, it would be seen as a good deal and the negative factors would be overlooked. And, therefore, the ultimate sale price would be bid up from the original list price. It worked like a charm!
My suggestion when considering price is to look at not only your own motivations as a seller, but also those of a prospective buyer. Carefully analyze your home’s perceived value (based on benefits and drawbacks) and then consider a pricing strategy based on these factors.
And, remember, the market is a moving target — sometimes we need to re-calibrate our strategy. This is where a good agent can provide invaluable insight because nailing your pricing strategy is priceless!
Ann McClure is a licensed real estate agent in Virginia and Maryland with McEnearney Associates, Inc. If you would like more information on selling or buying in today’s complex market, contact Ann at 301-367-5098 or visit her website AnnMcClure.com.
If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: [email protected] or call 703-549-9292.
McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreAlexandria