Comparative Market Analysis A guide to pricing your home

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1 Comparative Market Analysis A guide to pricing your home Prepared by: 1065 S Allante Place Boise, ID alissa@minegargamble.com

2 The Pricing Pyramid How you price your home will have a direct impact on how many buyers, showings, and offers you attract and ultimately how readily it sells. At the pyramid s center is the fair market value (FMV) at which a reasonable percentage of buyers would view and purchase your home. When your home is competitively priced you will generate the most activity. When you price below the market you ll attract a greater percentage of buyers. Conversely, when you price above the market you ll attract a lesser percentage of buyers if you attract anyone at all! Asking Price compared to Market Value % of Potential Buyers who will look at Property +15% 10% +10% 30% FMV 60% -10% 75% -15% 90%

3 Activity Your Home s Optimum Time on Market General definitions of fair market value usually say that it is the price a home should sell for when it has been on the market for anywhere from three weeks to two months. However, if you desire top dollar for your home, experience shows that you should try to receive and accept a solid offer sometime during the second to fourth week that it s on the market. It is during this three-week window that your home will enjoy maximum market exposure and buyer interest. Beyond five weeks your home will increasingly be viewed as a stale or time-worn listing, i.e, as a commodity with a history of being rejected by other buyers. As a consequence, there will be less interest, fewer showings, fewer offers, and even less likelihood that you ll receive your asking price. That is why it is critical that your home be correctly priced during the first few weeks that it is on the market Weeks on Market

4 Price vs. Comps When It s a Seller s Market When it is a seller s market, your home s condition can be less than perfect and price can be a little high and you may still be in the market. Above Below In the Market Great Condition vs. Comps Poor

5 Price vs. Comps When It s a Buyer s Market When it is a buyer s market, your home s condition must be near perfect and price must be at or below market value in order for you to be in the market. Above Below In the Market Great Condition vs. Comps Poor p f

6 When Your Price is on Target According to the National Association of Realtors, when your home is priced right and in good condition it should: Average 1-2 showings every other day Receive an offer after 10 showings Our best marketing time for your home is in the first 30 days! But when we re off target, how far off can we end up? If we are showing your home but have no offers, our price is 4-6% off. If we have few showings (1-2 each week) and no offers, our price is 6-12% off. If we have no showings and no offers at all, our price is more than 12% off.

7 Price The Consequences of Overpricing The strategy of overpricing your property knowing that you can reduce the price later may, at first glance, appear sound and seem to make sense. However, it rarely works. In fact, sellers who overprice their homes even just 10% above market value often end up getting less than they would if they had priced it properly from the beginning. Here s why: A high price makes other comparable properties more attractive, so you actually help to sell your competition. Few buyers will respond to ads, fewer agents will show your property to their clients, and you will receive fewer serious offers. Inflated prices often lead to mortgage rejections and critical lost time waiting for finance approvals that do not go through. Reducing the price after buyers have begun to perceive your home as a stale listing will not generate nearly as much interest as if you had priced it properly from the beginning. This is why pricing your property correctly to coincide with its window of maximum market exposure and buyer interest is so important. And if we determine the price isn t right, we need to make a price adjustment quickly and continue adjusting every two weeks until we get an offer. Market Value Time on Market

8 What s Important When Pricing Your Home The most important decision you will make is where to price your home. Pricing at fair market value will attract more buyers, and having more buyers normally results in a higher purchase price. Overpricing results in a longer market time and more likely a lower price. Historically, your first offer is usually your best offer So what determines the value of your property? Well, let s begin with what doesn t determine its value: What you paid What you need What you want What your neighbor says What another agent says What it costs to rebuild today The value of your home is determined by what a buyer is willing and able to pay in today s market. Buyers make their pricing decision based on comparing your property to other properties available in your market. Another important reality in today s market is that properties must appraise at the agree-upon purchase price in order for a deal to be approved by the buyer s lender. Appraisers determine value based on historical information what has sold recently in your area that is similar to your property. You must use both past history and current competition to determine the best price for your home. My job is to provide you with the market data and all the factors that affect your home s value so that when we are done you will have all the information you need to make an informed business decision. My job is to help you understand the market, but it is you who will determine the ultimate asking price.

9 The Concepts of Regression & Progression Regression Progression Fair market value is a function of the market... not of cost.

10 We Know Where Your Buyer now Resides! The Law of.50 and.66 Your buyer s home + 50% Your home List price of your home x 66% Your buyer s present home

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