Real Estate Pricing Checklist

You are anxious to get that sign up, but hold on! Before you set the price on your house, inventory what's going on, from your own mood to the mood of the market. The time spent analyzing the landscape is well spent.

Check your own mood

A seller’s biggest advantage is time, because the more time you have, the more you can prepare and do your homework. However, if you’re in a rush to sell, you’re at the mercy of the buyer; you won’t have the luxury of preparing or waiting for an ideal one.
Do not disclose your timetable to anyone, even your agent. A rushed seller means a bargain for the buyer and savvy buyers can smell panic a mile away. If you’re planning on selling in the next 6 to 12 months, you have lots of time to prepare.
As odd as it sounds, sometimes people sabotage their own intentions by being too greedy. Don’t do it! As you really start looking at homes on the market, you will develop a sense about what is priced low, high, or just right. Doing your homework here will help you truly understand home values and you will be able to set a reasonable price — a price that buyers know is just right.
Tracking neighborhood values – You need to become somewhat of a snoop because you need to learn more about your neighborhood than you ever thought possible.

Mood of the market

Markets have moods? They do! You need to judge whether it’s a seller’s market or a buyer’s market and it could vary by city, state, and neighborhood. Your interest is in your own neighborhood. And when we mention "market", we don’t mean the neighborhood grocery store. The market is a catch-all term for all the ingredients that go into the mood of real estate at a given time. It can include such things as interest rates, home inventory, job forecasts, and even time of year. The market shifts constantly, so you need to raise your antennae and tune into what’s going on in your neighborhood.

Market Mood Checklist

Inventory: How much is out there? Assess the inventory of homes in your area by driving around or use online sites to search for sale homes in your neighborhood. Also, real estate agents send out monthly mailers detailing home sales and include all kinds of information, such as number of homes that are on the market. If you live in a desirable neighborhood and there aren’t many homes for sale, you will have a clear edge here. However, if you drive around and do see lots of homes on the market and they’re not selling very quickly, you might have to reduce the price you had in mind.
Days on the market. Review the homes in your neighborhood and their days on market (DOM). Once again, that real estate mailer that you were throwing away for all those years will now come in quite handy. Look over the number of properties that are for sale in your neighborhood and look at how long they’ve been sitting. Anything over 30 days is an indication of a slight market slowdown; anything over 60 days means the market is really fickle. It’s most helpful to view this chart over a 6-month period (at least) to get an idea of demand. Fig 1:
Listing discount. That nasty little statistic that real estate professionals toss around looks something like this: SP%LP. Ugh. It means: What was the percent difference between the home’s list price and the sold price. Or, simply put: Are homes getting their asking price? If you see percentages such as 105% or 100.36%, that means it’s a seller’s market — sellers are getting more than their listing price. But, if you see 96.9% and 92%, that means sellers are getting less than their asking price.
Look up your ZIP. Look at trends for the past year and assess whether homes were appreciating or depreciating (e.g., homes in your ZIP code were rising by 2% each month for the past 6 months). Unless you see a downward tick in this number, you can probably assume this will continue. If the index in your neighborhood is rising, that means people are in the buying mood. If the index is on a downturn, that means buyers have the upper hand.
Check your local news. Check your local newspaper’s real estate section for charts or articles on sales trends in your ZIP code.
Jobs, jobs, jobs. Monitor the job situation in your area. Are companies or factories closing down? Not a good sign. But, if "Major ABC Company” in your local town is expanding, kick your heels up because that means jobs, more people, and more housing will be required. This is good.
Track neighborhood values. Each week, walk or drive around your neighborhood and begin collecting listing sheets — you know, those fliers that agents create to list the facts and amenities of a home. It’s amazing the knowledge you gain by tracking neighborhood home values and price points. Ideally, find homes similar to yours and pay close attention to the "action” surrounding them. Are they getting lots of traffic? As you collect these listing sheets, put them in a folder and date each sheet. Make note of the list price, sold price, and days on market (DOM).
Attend nearby open houses. This is good for a number of reasons: to observe how other properties are showing and to assess their value; to chat up the listing agent (they have loads of info to share), and to feel the "mood" of potential buyers. Once you do this weekly, you will get an excellent feel for home values and what potential buyers are after. After doing this for a couple of weeks, challenge yourself by guessing what homes "go for" as you approach them for the first time. You’ll be surprised at how well-trained your eye becomes with some practice and exposure to homes.
Tune into neighborhood, grocery store, and coffee shop chatter. There’s nothing like information you hear on the street to get a sense of what’s happening in the buying/selling community. Check out neighborhood or community association Web sites or blogs.