Posted by: Todd Long | October 1, 2008

Pricing Your Home to Sell-Part IV

The Pricing Triangle:


Here is where we pull all the pricing tools together?  Looking at the Comparative Market Analysis for the subject property gives us a Fair Market Value, based on Sold Comparables.  Looking at the Absorption Rate Analysis tells us how long a home priced in that Fair Market Value can expect to be on the market.


Then we plug the numbers into the Pricing Triangle. 

If we position a property in the middle of the triangle (the FMV) we have a shot at 50% of the buyers.  If we price it above FMV we only have a shot at 10% of the buyers.  These are the buyers than must live in this neighborhood, must be in this school system and so on.  If we price it below FMV we have a shot at 90% of the buyers because we have the 50% from above and now we add in bargain hunters, speculators, investors and so on. 


The decision becomes a balance between time and money?  If you can afford to keep your property on the market, in good showing condition day after day, for the number of months indicated in the Absorption Rate Analysis then you can position the property at Fair Market Value or slightly above.  If you need to sale your home faster than the Absorption Rate Analysis indicates then you need to position your property at the bottom of the FMV.  It’s that simple.


I’ve mentioned this before, but it is worth mentioning again.  Real estate agents don’t set the market.  They can’t make a property worth less or worth more.  They can only evaluate the market.  Resist the urge to choose your agent based on who quotes you the best price.  Would you choose your doctor based on which one told you what you wanted to hear?  I encourage you to choose your agent based on competency in analyzing the market, and the marketing plan to get your property sold.


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