The Importance of Price Discovery

We invest considerable time and energy when completing a valuation for a home we are going to list. We apply our experience, analyze relevant nearby sales, active listings, and statistics to determine market value via what we call a comparative market analysis (CMA). Even with detailed analysis, the market value on paper is always hypothetical and potentially imperfect. There is no inherent or fixed price for a property, the market is always changing, and the comparative market analysis is backwards looking in nature. The only real way to know a home's worth is to expose it to the market.

It is very important to expose and market the home properly. The market value is not a single number but a range, and we want our seller clients to achieve a price as high as possible within that range. The home should be presented as best as possible in marketing, and in person. The home should be visible in the right places so that active homebuyers, and agents are aware of it. The home should be accessible for buyers via private showings, and potentially open houses.

Once the home is exposed properly it is important to listen & interpret the "market's reaction." If the property is generating a high volume of buyer visits (private showings & open house traffic), feedback is positive and enthusiastic, and there is serious interest, we could determine that the property is priced well. If all of these metrics are extremely positive we may determine that demand is higher than expected & the property may be underpriced. If the property is receiving a good amount of interest, that will reaffirm our belief in the price and influence how we negotiate with any offers. If the interest is extremely high - we may push offers to a certain date to try to maximize the amount of interested parties we can get through and position ourselves to entertain multiple offers. With multiple offers, the market may determine that the real market value of the home is higher than our list price. If buyer visits are low, comments are focused on flaws in the home and the price, there is a lack of serious interest and offers, we can determine that the price may be high. We have the option to wait patiently to see if someone will try to negotiate with us. Or we can adjust the price in a thoughtful way until we generate serious interest and offers. Generally a busier listing with more enthusiastic buyers will achieve a higher sale price than a slower listing.

Every home is unique, and market conditions are also unique. The available inventory of homes is always changing, and the basket of serious homebuyers is always changing. We can't perfectly predict how all of these things are going to interact and what that will mean for the seller of a home. Once the decision to list a home is made, it is important to listen and interpret the markets reaction, and adjust strategy and approach where needed. We sometimes call this price discovery. We are always here to chat through your questions about buying or selling in this market. We appreciate your referrals to friends & family.

Cheers, Joe, Doug & Randal Real Estate Team