Seller’s will receive a CMA or Comparative Market Analysis when pricing a property. This report is compiled data from recent transactions to present to the seller a "snap shot" of current market conditions.
"Comps"
The comparable properties or "Comps" should reflect a similar bedroom/bath count, age and square footage. The transactions should be within the recent 6 months. In cases where there is limited similar properties, adjustments can be made to determine a correct dollar value. For example, a property that has no garage will have a subtraction from the comparable for the value of that garage.
This analysis is used as a standard guideline for pricing.
Ultimately there is one principle that holds true "A HOUSE IS ONLY WORTH WHAT SOMEONE IS WILLING TO PAY FOR IT!"
This means that the buyer actually determines the price.
Say What?
It is important to get the pricing right from this perspective otherwise it could result in a lengthy time on the market which statistically causes a decrease in desirability, and a possibility of many other inconveniences like continued mortgage payments, unexpected repairs, etc.
A good agent will identify all the factors that affect pricing; market conditions and inventory.
Buyers market = Inventory is high, there are more houses for sale then there are buyers. Houses sit on the market longer, prices are dropped, and buyers have more leverage.
Sellers market = Inventory is low, properties are scarce, and buyers have to compete with other buyers to get an offer accepted. Prices are driven up and sellers have more leverage.
A new factor creating an anomaly in home pricing is.... the Zestimate!
A large majority of home buyers do their own searching online from their electronic devices, phones, and tablets. Websites like Redfin, Trulia, and Zillow provide these users a value based on an automated valuation system. Real Estate Agents as well as investors are often disgruntled over an inaccuracy in the estimate claiming that it doesn't accurately account for condition of the property. Regardless of it's credibility or accuracy, this is the number buyers are seeing and it heavily influences their opinion of value.
It is a good practice now for agents to look at these sites and their values and show them to their sellers, explaining how they will impact the viewpoint of the buyer.
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