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Home Pricing

Pricing a Massachusetts home properly

Every week on the Multiple Listing Service (MLS) you see countless homes that come up “expired”. For those that are not familiar with the term, an expired listing is a home that did not sell. When looking over the possible common denominators of why some homes do not sell the reason is usually pretty easy to spot.

In most cases the reason is very simple. The home was improperly priced. In a very competitive Real Estate environment, the price that is set on a home can be more  than 75% of the marketing!

What the hell do you mean by that Bill? Very easy… if you come on the market at the wrong price, the best Realtor in the country with the most sophisticated marketing will not be able to get a home sold.

As the graph above shows, the further you get from market value, the percentage of buyers dwindles.

So who is to blame when a home comes on the market at the wrong price? Tough question to answer but most of the time the fault lies with the Realtor. How so? The Realtor is the one who does the market evaluation on the property and gives the seller a suggested list price and probable sale price. I know there are some that are probably thinking that is all well and good but on many occasions sellers think their homes are worth more than the suggested value and insist of the home being listed for a higher price.

My response would be the Realtor doesn’t have to take the listing! The problem in our industry is that for every overpriced home there was a Realtor who was willing to take it. There are some agents that have the hardest time walking away from potential business.

Then there are the Real Estate agents that always tell sellers what they want to hear in order to get the home listed, especially when the agent knows they are in competition with other Realtors. Shocking but true. Buying a listing in this industry has been going on since the 1st Real Estate companies went into business. Tell em what they want to hear, get a signature on the contract and then beat em over the head for price reductions. So unprofessional but it happens a lot! Some agents don’t care because they use a listed home to generate buyer calls which can turn into future business.

How do you avoid this? When you are sitting down with Realtors to go over the value of your home you should be getting some kind of appraisal report preferably with pictures that show other like homes that have sold. The homes being compared to yours should look similar. If they don’t a red flag should be going up in your head. Likewise, if the homes do look similar yet the agent is telling you a much higher price for your home there should be a rock solid explanation of why that is the case.

Remember fair market value is what other similar homes have sold for. Not what you need or want to sell your property for. Buyers could care less what your perceived needs are. All they care about is paying the right price.

Over and over again statistics show that homes priced properly out of the gate sell for more than those who believe a higher list price leads to a higher sale price. As the days on market grows for any property on the market so does the gap between the original list price and final sale price. Ask any buyer which home they feel they have more bargaining power on…the one that has been on the market for 200 days or the one that has been on 20.

Top Producing Massachusetts Realtor

The second biggest part of the equation to having a successful home sale is picking the right Realtor.

Over the years this has been the one thing that really baffles me about the Real Estate business. Selling a home is a huge decision yet on many occasions there is so little effort that goes into picking a Real Estate agent to work with.

Unfortunately, some folks mistakenly believe we all do the same thing to sell homes. This could not be further from the truth! Choosing a top producing Realtor should be an important criteria yet it does not always work that way.

In most industries when you want a hire someone to do work for you the persons track record and qualifications are of the utmost importance. From what I have witnessed 1st hand, a fair amount of time this does not enter a sellers mind when putting their home on the market. Instead they pick someone they think has a good personality or again tells them something they want to hear.

In most industries there is an 80/20 rule where 80% of the business is done by 20% of the people. Most people do not realize that in the Real Estate industry 94% of the business is done by 6% of the agents! While that is mind blowing, it also is easy to see why there can be a lot of disappointment amongst consumers with their agents.

So much goes into being a successful Realtor and an entire article could be written about it but some of the important traits you should be looking for are a past track record of success, a powerful marketing plan centered around the internet,  excellent communications skills, and brutal honesty. If a Realtor possesses these four traits you are more than likely going to have a very pleasant experience selling your home or condo.

Asking some good Real Estate interview questions for Realtors always goes a long way in making better decisions.

Other obstacles to a successful home sale include making it difficult for people to get into the home and not presenting the home well. In a competitive market you want your home to shine not stick out like a sore thumb. It is awfully tough to sell homes when they look like the pits and equally as difficult when potential buyers can never get in to view it.

Related Real Estate articles:

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About the author: The above Real Estate information on how not to sell a Massachusetts home was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Southboro, Westboro, Ashland, Holliston, Upton, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

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Pricing a Massachusetts home

When I 1st got into the Real Estate business twenty four years ago we used to carry around the big bulky MLS books. Back in those days this was how we knew what properties were on the market in Massachusetts. The internet was in it’s infancy and jumping online to look at properties was not an option for a consumer wanting to purchase a home.

For as long as I can remember Realtors have been pricing homes so that the list price ended with 900. As an example, instead of the home being priced at $350,000 it would be $349,900. The majority of the Massachusetts homes on the market are priced this way.  In fact, you see this type of pricing strategy for a lot of different products whether is be for a car, gas, or something on late night television.

The reason for this is psychologically the price looks lower in our minds when it is just under a certain price point. Expert marketers know this is the case when trying to sell product.

As consumers we fall for it all the time. Come on admit it, you know you have at least one of those gadgets from late night TV that are supposedly  going to give you rock hard abs somewhere in the back of your closet at home! Besides the fact you want abs the price looked pretty good too.

Going back to the days of the MLS book, Realtors would jockey for position and soon instead of pricing the home to end in “900″ it became “899″ or some other number. We were all trying to position our listings to be seen by more eyes.

Pricing ending in “900″ continues in Real Estate to this day but I can tell you it is not always a good idea.

As I am sure you are aware over 90% of all buyers find their homes from doing an online search. The days of newspapers and magazines being an effective medium for finding homes is over.

Pricing a Massachusetts home to sell

When people are looking for homes for sale in Massachusetts more often than not they are searching in either $25,000 or $50,000 increments. So let me show you why pricing your home at $349,900 instead of $350,000 is not a good idea.

Lets say I am a home buyer looking for a property between $300,000 – $350,000. Doing a standard search from either an MLS search portal or visiting a site like Realtor.com is going to show all the homes in the selected range. In this search the home priced at $349,900 is going to be seen with no problem as it falls $100 shy of the end of the search range.

What if a buyer is searching for a home between $350,000 and $400,000? Well guess what the home priced at $349,900 is going to be missed by this buyer because it was just under the range.

By pricing the home at $350,000 a lot more eyes are going to be looking at this property! As a seller, you are going to hit both ends of the range.

Obviously when selling Real Estate this is a good thing. We want as many people looking at our properties as possible. Having proper pricing and a marketing plan that delivers outstanding internet visibility is what sells homes today.

If the price of the home does not fall on a quarter increment then pricing it ending in 900 is perfectly fine. You are going to see no difference in a home priced at $364,900 or $365,000 in terms of traffic generated online.

While we are on the subject of marketing, another pricing strategy that you should be aware of is value range pricing. This way way of pricing is essentially a marketing gimmick used by some Real Estate agents. Do your home work and don’t be mislead by these kind of tactics that do little to sell your home!

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About the author: The above Real Estate information on Real Estate pricing strategies was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

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Massachusetts Realtors using value range pricing

Real Estate value range pricing is not that common in Massachusetts thankfully! The term value range pricing can also be known as “variable pricing”, “value range marketing” and “range pricing”.

So what is Real Estate value range pricing exactly? It is when you list a home for sale and rather than going out on the market at a set price you give a range in which the seller will consider an offer.

For example a home could have a value range price of $500,000 – $550,000. Before I get into why value range pricing is deceptive and nothing more than a marketing gimmick let me explain it’s origins. It was originally started here in the United States back in the mid 1990′s by Prudential Real Estate. The idea was borrowed from Australia. It caught on in some areas of the country most notably Southern California, Arizona, and Florida but was never used extensively here in the Massachusetts area.

In other parts of the country the Multiple listing service (MLS) is set up to handle value range pricing as a marketing option. Here in Massachusetts there is no such option. So how and why do Realtors use value range marketing?

When you list a home here in Massachusetts your only option is to select a list price. Using the above example, the Realtors that push this non-sense will list the home at $500,000 in the MLS but in the remarks it will say value range listed between $500,000 and $550,000. In other words the seller may consider offers between $500,000 and $550,000.

The goal is to get more eyes looking at the property that otherwise might not if an absolute price was chosen. Traffic and exposure they say. I say it is a bunch of poppy cock! I can not tell you the amount of times a buyer has called and asked me to show them a few homes where one of them is value range priced and the buyer does not know it. Most buyers don’t read every line of detail in a listing and often times it can be missed.

So what happens when that buyer who is qualified to spend $490,000 thinking they are looking at a $500,000 dollar home finds out the seller will only accept offers between $500,000 and $550,000? You guessed it they are usually pretty pissed off and start to question why a seller would price a home this way. More often than not the seller has been sold a bag of goods by the listing Realtor on why this is a great way to market a home. What good is traffic and exposure if the person looking at the home is not qualified to purchase? It is a waste of everyone’s time.

Stupid Massachusetts Realtor using price gimmicks

This kind of pricing strategy is perfect for the Realtor that doesn’t know how to price homes properly! Value range pricing should be re-named “I don’t know what the hell I am doing pricing”.

This works well for the Realtor who used to drop the price on nine out of ten homes they were marketing but has a fallback plan now. Not sure about the comparable sales? Hey lets just value range price it…Brilliant!

All this does is put confusion in the buyers mind. Using the above example again what if the home is worth less than $500,000? The seller could be expecting something in the upper end of the range and the buyer is thinking no way Jose. This kind of pricing strategy just gives sellers false hopes. In a down market how many buyers would ever even consider offering something in the upper end of the range. Not many. What value range pricing really amounts to is ” bait and switch marketing “.

Regardless of any range of price used to market a home a good buyers agent is going to pin point the market value for a buyer. A sellers best bet is to price their home properly and not rely on pricing gimmicks. In fact, I tell people all the time setting the right price is 80% of the marketing. If you come out at the wrong price you can have the most exposure of any home in your town and it is not going to matter.

Other Real Estate articles worth reading:

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About the author: The above Real Estate information on Real Estate value range pricing was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

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Value of homes based on square footage

Over the years working as a Realtor I have seen numerous home buyers as well as other Realtors try to use dollars per square foot as a good measuring stick for market values. Sorry folks but that is a very poor way to analyze value.

There are a number of reasons why this is the case but lets just start with individual homes themselves. If you look carefully at housing characteristics you can basically break down a home into one of four categories.

Economy~ Economy would be characterized as building a home in the most cost efficient manner. The materials used in constructing a home in this category more often than not will be cheaper than other categories of homes. The goal is to deliver a home that would be affordable to those buyers on a lower income. If you looked in a catalog of materials such as cabinets, flooring, lighting and plumbing fixtures you would see the lowest grade used in this category.

Standard – A home built under this category would be a step up from an economy home. A large percentage of homes would come under this category. You would expect to see the quality of the home jump from an economically built home. With a standard built home you may see some construction items  that could also be found in both economy and custom categories.

Custom – In a custom built home you are bound to see things that you will not find in either an economy or standard home. The quality of the materials used to construct the home as well as the amenities inside are going to be different. As an example you may see a higher level of finish woodworking, cabinetry, flooring selections and hot buttons like granite counter tops and stainless steel appliances. Custom homes are more unique and may have other architectural characteristics that make them more expensive to build such as intricate roof lines and higher end materials used on the facade such as stone or brick.

Luxury – A luxury home is the creme de la creme. These are the homes that are built with the highest grade construction materials.  There is no expense spared on anything and the amenities seen inside the home are sometimes enough to make your mouth drop! It is not unusual to see such things as home theaters that rival going to the movies, indoor swimming pools, wine rooms and other such amenities.

Of course it is possible for a home to fall somewhere between each of these categories but the four categories are enough to show you why using price per square foot to determine a homes value is a very poor measuring stick.

Lets look at a quick example of two homes that are both 3000 square feet. They are both a year old.

House “A” has the following amenities: Luxury kitchen price per square foot

  • Granite counters and stainless appliances
  • A custom tile shower
  • Hardwood floors throughout the 1st floor
  • Raised paneling and crown moldings
  • A brick walk way

House “B” has the following amenities:

  • Formica counters and white appliances
  • A standard shower
  • Carpets through out the 1st floor
  • Plastered door openings with no molding
  • A dropped flagstone walkway

How about a quick guess of which home is going to be worth more on a dollars per square foot basis?

This example clearly shows that you  can not take the average price per-square-foot and multiply it times the square footage of the home you are thinking about buying. There are far too many variables involved with the characteristics of a home to make a generalization like that. It just doesn’t work that way. The pricing per-square-foot simply gives you average or median ranges; it shows you trends in the market. It does not compute value!

The comparison above only touches on one reason why cost per square foot is a poor indicator. There are others including the fact that prices per-square-foot can vary based on the homes location, improvements, condition, age and updates, including lot sizes, and whether it’s a one-story, two story or split-level home, among other things.

I think it is easy to see that if home “A” was also located in the best part of town and home “B” was not, the disparity of the selling price is going to be even greater which would change the price per square foot between the two homes.

One of the best reasons for even looking at the price per square foot of a home is to see what the trends are in an area.  You can look at the average price per square foot over a given time period and see whether overall market are values going up or down.

In Massachusetts one of the other factors that can really skew the averages on the price per square foot of a home is how the square footage is actually calculated. In the Greater Boston MLS there is a big disparity on what agents include in the gross living area of a home. You will see that some homes include finished basement space and others do not.  This can cause quite a fluctuation in how these figures appear when doing an analysis on square footage value.

As you may realize, finished space below grade is far less valuable than above grade living area. When these figures are mixed together it makes a straight line comparison much more difficult.

I have run into plenty of buyers agents over the years that try to present a case of why their clients offer is a fair one. When they start talking about price per square foot I usually end up giving them a lesson in proper market evaluations:)

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About the author: The above Real Estate information on price per square foot is misleading for Real Estate values was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

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