Casey Samson, Samson Properties #1 Agent’s, Pricing Model
Rule #1: Well Priced Homes Sell at Maximum Value
Rule #2: Don’t Forget Rule #1
Results count: Over $100Million in 2016 sales at an average of 99.1% of list price in an average of 31 days.
There are 5 steps to Pricing (you can skip the 5 steps by emailing me at firstname.lastname@example.org, and I will do it)
Step one – Establish Comps
Proper Comparables are based on age, type of home, size and similar features. Credibility is given to same neighborhood, same street. In other words this is where we compare apples to apples.
Step two – Using approved comps, produce a Pricing Model
The model includes:
- Range of Percentages based on sale price vs county assessment
- Range of Price per sq ft (PPSF)
- Produce “The Index which is a combination of the two numbers
Here is a sample Pricing Model:
Step Three – Apply the intangibles.
- Lot location
- Age and Condition
- Space features and function
- Bathrooms on bedroom level
- Updates or upgrades
- Current market conditions (HUGE FACTOR)
- These factors are opinion, not fact, so experience is the only way to factor these characteristics into price.
Step four – Apply Thresholds
Buyers search for homes based on a minimum and maximum price. Example searches:
Buyers search $750,000-$800,000 so you would not list a home at $810,000. You would list at $799,000 to compete against an weaker price group.
Buyer search $500,000-$550,000 so you would not list at $555,000. You would list at $550,000
Step five – Monitoring traffic and comments
Homes are unique and a great deal of pricing is opinion not fact. You need a certain amount of real buyers to see your home in order to sell. You need to listen to the market very carefully One of three things is going to happen:
IF we are priced right, we will have good traffic, nice comments and a contract or 3 within the first week. This scenario often causes buyers to bid pricing up and gives sellers a back up contracts for leverage during inspections.
IF we are priced too high, we will either have very little traffic or a ton of traffic and no contract. Either one tells us we are “out of the market” (priced too high). The amount of traffic, comments, market conditions and price range all need to be taken into account when determining whether you drop $25,000 or $50,000.
IF we are a little low multiple people will submit contracts and drive the price over list and give us back up contracts. This actually is the preferred way because back up contracts protect sellers during the inspection period. THIS IS VERY VALUABLE.
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This article “Pricing Model” was written by Casey Samson, please do not copy the content without permission.