8 Key Steps to Realizing Your East Bay Home Price Goals
Much like writing a winning real estate offer, pricing a home is both a science and an art.
Pricing a home successfully requires a deep understanding of the market and how real estate works. For example, timing plays a huge role (more on that below) as does a fundamental understanding that ultimately the market sets a home's price.
Above all, sellers need to understand the East Bay's unique pricing culture, in which East Bay homes are routinely under-priced from 10 to 20 percent of their expected sale price. This is a reality that colors all local real estate.
While pricing really remains a case-by-case, block-by-block, seller-by-seller exercise, some best practices exist that sellers and good agents will employ to best meet their real estate goals.
With that, we collected eight key pricing insights from our Red Oak Realty agents presented below
Identify Your Realistic Goals
Setting a productive price requires a clear understanding of your realistic goals and needs. Are they clear and attainable? Do you want the highest possible net price or do you really need to close quickly? Answers to these questions dramatically change how you will price the home.
Depending on their specific needs, of course, sellers can benefit from counseling from a knowledgeable agent. This is one of the areas a good agent can be an invaluable asset -- helping sellers understand which goals are realistic, which may be a stretch and which just cannot be met.
Price with the Competition in Mind
Before listing, always gather as much data and input as possible. Consider nearby current active and comparable listings, as well as under-contract properties, and keep abreast of what's happening in your listing's immediate neighborhood. The more data points and input on pricing, the better.
Kathleen Wilson
“It's about what else can a buyer buy instead of your house?" says Red Oak Realty agent Kathleen Wilson. "We do not want to drive buyers away from the sellers' home and to the competition.”
In other words, price with the competition in mind. Buyers usually consider homes in a larger geographic area. Check out active listings of similar size, condition and location relative to amenities in a larger geographic area. Compare the list prices of these homes, but, more importantly, look at recently sold prices of comparable homes. Sold homes demonstrate what a buyer actually paid for a home, not the asking price.
When you have a good, well-connected listing agent, she will network with other agents and assess interest level in both the particular home and those like it. Alos, she will know which homes achieved multiple offers and which didn't. This all feeds into a successful pricing calculus. It also affects timing, which a good agent will precisely calculate to stand out from the competition.
Research Ahead of Time, but Wait to Price a Home Just Before Listing
Red Oak Realty agents Pascal and Ana Forest
“Never price a listing until right before it goes on the market, just before you enter it into MLS,” says Red Oak Realty agent Ana Forest.
Related to the section just above, an ever-changing market dictates that sellers and their agent won't know the best price until just before listing, as local trends and real estate momentum can shift dramatically week to week, especially in the busy spring and fall selling seasons.
Make the Gap Between List and Desired Sales Price Not Too Large
Feri Niroomand and Negar Souza
As mentioned above, the East Bay has a peculiar pricing culture, in which homes are routinely priced under what sellers and listing agents expect them to sell for. With that in mind, however, it's important to carefully balance the calculus between pricing a home attractively enough to entice multiple offers, which can encourage a bidding war that pushings an offer price well above asking, and pricing it high enough such that offers actually meet your desired price threshold.
“You only have one shot to make a first impression,” reminds Red Oak agent Negar Souza.
First impressions count! Listing too high runs the risk of nobody even looking, or will hurt you when first presenting a home to buyers. In this delicate market, if exhausted or frustrated buyers feel a home is out of reach, they won’t even show up to the open house to avoid disappointment.
When to List Low
There are times when it’s actually a good idea to list well below what you expect to sell for. It depends on the actual property, of course.
If you list an attractive property really low, and both agents and buyers know this is a low list price, even if you get only one offer it can be significantly over the list price.
For example, when selling a one-bedroom condo listed for $499,000, pending with multiple offers after 13 days on the market, Red Oak agent Linda Elkin advised her clients list very low. As there are lots of buyers in this relatively low price range (for the East Bay), they'd need multiple offers to get the highest price; it worked.
Linda Elkin
Know your Neighborhood
A huge part of pricing (and knowing when to list low) is knowing your neighborhood.
“You need to know which neighborhoods will sell with multiple offers in two weeks with a low list price and which ones are wobbling and might not get offers, leaving you stuck with having to raise the list price after three weeks,” Linda Elkin added.
Linda recommends listing low in the following neighborhoods: Albany, North Berkeley and Rockridge. But even so, not every time; everything depends on each listing's particular situation. Listing closer to desired sale price works well for neighborhoods such as Montclair and Berkeley Hills, but again -- not for every house.
Consider Seasonality
We have a blog post coming later this month on just this topic, but we'll note here that supply and demand follow recurring patterns timed to the seasons. In this way, the timing of your listing plays a significant role in how you price it.
Arlene Baxter
“Usually the early spring market is characterized by exceptionally low inventory and pent-up demand,” agent Arlene Baxter explains, “resulting in the greatest flexibility in pricing.”
Invest in Marketing
Last but not least, invest in a smart marketing strategy.
“There are only two reasons a house does not sell: marketing or price," Red Oak agent Kathleen Wilson notes. "My value to the seller is in marketing and negotiation.”
Having more showings and more offers helps give agents more ammo because buyer competition drives sales prices up. The more exposure the home has, the more showings it receives, thus more offers and a consequently higher sell-price.
When marketing your home, consider everything from location, including walkability, supply of similar and nearby properties, and anything unusual that may help your home stand out.
Have any questions about pricing your East Bay home, contact us!
