Given that we are going to list this thing in the next day or so and people generally like to know how much they should write the cheque for, perhaps we should settle on a price.
Given, further, that it's our own house and some bias could sneak in, we hauled in three of our trusted local colleagues for a group think and sanity check on our best efforts at market evaluation.
Their estimates landed pretty much on top of ours. Market value homed in on a range from something over $850,000 to a about $885. One had us over $900k for a while and one had us initially quite a bit lower, but came to the pack after a short discussion.
Two things. First, note that even five really good experienced agents, in a non-competitive environment, giving their best shots produced a range of almost $40,000. There is complexity, art and gut involved in the process as well as the system and science.
Second, market value is what you should expect to get once the dust has settled. List price is a tactical decision to help you get there.
Right now, we remain in a hot sellers' market. Some of what follows would be dramatically different if that were not the case.
A critical rule is "Don't price too high or you will be punished".
For whatever deep psychological reasons, buyers are resistant to offer lower prices on over-priced listings. They just go elsewhere. When they go elsewhere, the listing doesn't sell; when the listing doesn't sell, it gets stale; stale listings get forgotten...quickly. You don't want to be quickly forgotten. Don't overprice.
When this happens you move quickly from dreaming of insane bidding wars to price reductions and praying for an offer.
So that seemingly clever approach: "Let's try it at $xxx and if it doesn't go we can always reduce it later."?
Nice thought. Doesn't work. Don't do it. You typically end up with less money and more time taking 45 minutes to make the bed and trying to find where you hid your toothbrush and toaster before the last showing.
As a casual read of the morning paper may reveal, over-pricing is not a huge issue these days. Hardly an issue goes by without an item on what I call the "stupid deal of the day". The media can't seem to resist the "14 offers, $215,000 over list" story.
Some sellers and some of our colleagues play the game by listing seriously under-priced houses and gleefully popping "sold over asking" toppers on their signs.
A few of the issues and results of this process ... other than filling up the newspaper real estate sections:
. Sellers probably do not realize the risks they are taking. A weather shift, a major world distraction, a temporary or permanent market shift, or just bad luck and coincidence could lead to one, no, or low offers. Now what? Kill the listing and relist at a higher price? You look sill, the whole market/industry knows what you did and, even though the agents are probably doing it themselves with their own listings, you get punished.
. Buyers, once there are more than 2-3 offers, have no clue what it will take to get the house. They are at risk of losing their minds and paying too much. This is especially true if they have lost a few times at this game -- it's unbelievably stressful on buyers.
. Buyers have seen a house priced in their range. Even though they find out its value was six figures higher, that lovely home finds a permanent sunny spot in their minds and everything they can really afford gets compared to it ... unfavourably.
. Agents have to deal with the above. They have to pick up the buyers, dust them off and help them refocus.
. Agents also have to do more work to help buyers determine market value. And they can go squirrelly trying to help a seller price the next home in the area that is going up for sale. Did someone lose their mind, or go over current market value to get it over with, or is that the true value in this market? We don't expect any sympathy for the extra work, but I'm afraid that the accuracy of the results weakens.
In other words: "Bah". It's gotten so silly that houses in one neighbourhood have been found listing -- after renovation -- for less than they sold for 2 years ago! If a house sells for $100,000 over list, either someone lost it or, much more likely, the house was listed for 90-100 under market value.
We decided to price at $829,900. That's about $20k under the low end of our value estimates. It should generate interest and allow for a little error on the low end of our estimate. We will be surprised (disappointed) if we don't see $850k; we will be ecstatic bordering on feleling guilty or stupid if we see $900k; we expect $860-880k, firm, with something over 3 offers.
Place your bets.