Real Estate Agent Tips - Price it Right
Pricing a home correctly from the start is the most critical factor in a successful, timely sale. As a real estate agent, your expertise in this area is what provides the greatest value to your clients. A well-researched, accurate price attracts the right buyers, maximizes the final sale price, and minimizes the time the property spends on the market.
The Pitfalls of Incorrect Pricing
Incorrect pricing—either too high or too low—can derail a sale before it even begins.
Pricing Strategy | Outcome | Risk |
|---|---|---|
Priced Too High | Fewer showings, limited buyer interest, property sits on the market for an extended period. | The home may receive a "stale" listing stigma and ultimately sell below market value after multiple price drops. |
Priced Too Low | High traffic and quick offers, potentially leading to a bidding war. | Leaves money on the table for the seller and can raise buyer suspicion about the property's condition. |
The Comparative Market Analysis (CMA) is the foundation of any accurate pricing strategy.
1. Identify Comparable Sales ("Comps")Select recently sold homes that are most similar to the subject property.
- Rule of Thumb: Look for properties that have closed within the last three to six months.
- Proximity: The closer the comp is to the subject property the better.
- Property Type: Ensure the comps are the same type (e.g., single-family house vs. condo).
No two homes are exactly alike. You must adjust the sales price of the comps to account for differences with the subject property.
Feature | Adjustment Guidance |
|---|---|
Square Footage | Adjust based on local price per square foot (e.g., if comp is 100 sq ft larger, subtract the value of 100 sq ft from the comp's price). |
Bedrooms/Bathrooms | Use an established local value for each. |
Upgrades & Condition | Adjust for significant differences like a new kitchen, finished basement, or a recent roof replacement. |
Lot Size & View | Factor in premium views (e.g., waterfront) or oversized lots. |
While sold properties determine the value, active and expired listings provide market context.
- Active Listings: These are your direct competition. How does your subject property compare in price to homes currently for sale in the neighborhood?
- Expired Listings: These are often the "how not to price" examples. Most expired listings are a result of being overpriced.
Your goal is to be the expert, not just the messenger. Always provide a price range and a final recommended list price, backed by the data in the CMA.
- Educate on Market Dynamics: Explain that the market, not the agent or the seller, determines the final price.
- Focus on Net Proceeds: Shift the conversation from the gross sale price to the net profit the seller will walk away with.
- Set a Review Date: Plan a specific date—typically 10 to 14 days after listing—to review activity and adjust the price if necessary.
Final Tip for AgentsAlways obtain the seller's agreement on an initial price reduction strategy before listing the home. This removes emotion from future decisions and ensures a smoother process if a price adjustment is needed.
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