BY FREDERIC PETERS FOR FORBES: Pricing property right blends art and science. Particularly in a market like this one, in which both sales prices and sales volume have softened from month-to-month, analysis, while critically important, can only help so much.
While we know a sale of a similar property took place three months ago, how do we compare this price to TODAY’s property value? Values in today’s market change from month-to- month. Since prices do not become public until after a sale closes, and since a period of three to four months often elapses between contract signing and closing, sales prices are already out of date by the time they become public.
In this environment, what are agents and sellers (not to mention buyers) to do? Here are a few suggestions:
Use Your Relationships. The most useful comparable sales in a changing market are always those which have gone into contract during the past few weeks or month. Agents who have cultivated relationships within the industry can contact fellow agents whose sales have gone into contract recently to find out what the purchase price was. Even if those agents are reluctant to share an exact price, they will usually give you a sense of what their property received if you have been collegial in your behavior with them in the past. It’s one of many reasons why it’s always better to be a good citizen rather than a difficult one.
Avoid Aspirational Asking Prices. Even in a down market, many asking prices are aspirational rather than realistic. They don’t provide useful guidance as to proper pricing; in fact, often they present a cautionary tale in how pricing incorrectly can lead to months on the market. This is often the highest and best use of asking price information in discussion between agent and seller: these prices can demonstrate what NOT to do.
Remain Conversant In The Analytics. In markets like New York City, different areas and types of property have experienced different levels of decline. The sophisticated agent acts like an appraiser, taking highly local recent sales information and analyzing it to arrive at pricing per square foot which takes into account condition, location, special features like views and outdoor space, and sales velocity within the particular submarket. If necessary, the numbers can then be discounted to account for drops in market value since recent transactions occurred.
BY FREDERIC PETERS FOR FORBES.COM: https://www.forbes.com/sites/fredpeters/2019/01/24/how-to-properly-price-a-home-using-analytics-and-intuition-to-get-it-right/