Posted by: Todd Long | September 12, 2008

Pricing Your Home to Sell-Part II


 As discussed in Part I, it is very important to price your home correctly at the onset of your home coming on the market.  Remember the school bus?  As one home seller, priced at or below market value, gets off the bus two more home sellers get on the bus, which leaves the homes priced high for the market on the bus for a potentially very long and cramped ride.


There are three basic steps to properly pricing your home.  You need a properly prepared Comparative Market Analysis (CMA), an Absorption Rate Analysis, and Pricing Triangle. 


Today I’ll cover the CMA.  Most all real estate agents do a CMA of some sort for a listing presentation.  A proper CMA compares your property (the subject) to the comparable (sold, expired and active) properties.  We are attempting to look at the property in a similar fashion as an appraiser would, primarily because 95% of homes are purchased with a loan from a bank that requires the home to appraise for the purchase price on the contract.  An appraiser only looks at the sold properties for his/her market analysis, but we must also look at Active properties when initially pricing the home.  In order to get a contract with a buyer we must beat the currently active competition.  We also look at expired listings (listing that went the full term of the listing agreement and did not close) to see which properties did not sell.


A proper CMA also comes with adjustments for square footage, parking (garage, street, carport), age, and condition, just to name a few.  These adjustments should not have a single line item adjustment of over 10% of the sales price and should not exceed 20% for all adjustments. 


From the CMA a Price Range for listing the home is established.  An appraiser is charged with the duty to nail down an absolute number which is fine; they are dealing with absolutes such as sold inventory and a contracted sales price between a given buyer and a given seller.  When you and your agent are placing the property in the current market of Active inventory it stands to reason that there may be a 5% plus or minus variance.  For example if you are a buyer looking for a home around $200,000 it stands to reason that you would buy that perfect home at $210,000 and would buy a similar home that fits your needs at $190,000.


Another small annoyance to consider is that most homes sell for about 95%-97% of list price in this area depending on the price range.  So a price adjustment with that in mind must be considered.


Once your CMA Price Range has been established, next we move to the Absorption Rate Analysis which tells us what is happening right now in the market and how long we can expect the subject property to be on the market.  Stay tuned for my Absorption Rate Analysis post.



Todd Long





  1. Nice blog.Keep on going with good work.

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