Selling a house is no small thing: most Americans’ homes are their single largest investment, and if you don’t reap a return on that half million dollars you plunked down ten years ago then you are – to borrow a realty term – up a creek.
In light of that it’s a little disappointing to learn that setting a price for your home is less about hard negotiations and more about research.
“Although the seller in most cases is attempting to maximize their return on the property, in many cases there are other considerations,” said Jim Stakem of RE/MAX in Ashburn. “Some of those considerations may include Capital Gains taxes, a need to sell quickly or some other special needs. It is critical that the realtor understand what the exact needs of the seller are and provide the seller with the proper advice to attain their goals.”
That advice usually comes in the form of a market analysis, an in-depth assessment of recent trends in the neighborhood of sale and in the regional real estate sector.
“Typically an agent will be looking at recent similar market activity, as far as houses in the neighborhood that have recently gone under contract or settled and closed,” said Shawn Milletary of Century 21 Redwood Realty, also of Ashburn. “In addition, it’s important to look at the current crop of active listings on both the re-sell and the new construction side. For existing sales, the Multiple Listing Service [MLS] is critical. Realtors use that for all active properties and nationwide it’s divided into regional segments. Ours includes Maryland and Virginia and down to about Richmond.”
The MLS is a useful tool that features virtual tours, curbside photos, square footage figures, and some comparative pricing, but Milletary said that a proper market analysis wasn’t complete without some old-fashioned leg work.
“The actual online portion, researching data, is somewhat quick,” he said. “The step that’s most critical is driving to properties that have already settled, visiting new neighborhoods, new construction, and similar properties already on market. Since nobody ever really writes bad information about their own listings in MLS, it’s very important to visit properties in person to get a more accurate representation. I have felt realtors are tempted not to account for new construction listings in their market analysis. Typically new construction listings are not listed in MLS, and in Loudoun County especially we have one of largest new construction markets in nation.”
Once a proper market analysis has been conducted, the realtor and the seller will agree on a listing price, with the realtor advising what he believes is the highest attainable price given the conditions on the market. A common problem, said both Stakem and Milletary, is that sellers will have an unrealistically high conception of their home’s value.
“In the case that there is significant disagreement between a seller and their agent about pricing, it would be very wise for the seller to request an opinion from another agent,” said Stakem. “If a seller prices a home at an unrealistically high price it will sit on the market for a much longer time and in my experience in many cases when the property is priced to sell it will in a short period of time.”
With the price set, the best way to play hardball isn’t to go with the cloak-and-dagger approach; the more open you are with your bidders, the better. If a prospective buyer knows that others have made an offer on your home, their instinct will be to put in a higher proposal. An accurately priced home should, in a seller’s market, move quickly and achieve something close to full price.
After that, the only obstacle between sale and settlement is the escrow period.
“During the contract period it’s typical that there would be a home inspection,” said Milletary. “Escrow is the period from contract to closing. In our market, that’s typically 25 to 45 days for re-sales, and from contract to the time of construction for new homes. The biggest hurdle would be any potential contingencies the seller may have. Settlement could be contingent upon home inspection, for instance, or sale of another home. My advice: if you have any obvious home inspection issues, have them fixed before put your home on the market.”
If everyone does the work they’re supposed to, Milletary said, the process can be a smooth one.
“It seems like there’s a lot of surprises in real estate, and there really shouldn’t be. If the realtor does his job, the house is priced correctly and marketed correctly, it should get a contract that is financially tenable. That only happens if the realtor is proactive and does the proper homework at each step.”
Part One: The right time to sell
Part Two: The right improvements
Part Three: Opening your home