Pricing your house correctly is critical to a successful sale.

In today’s dynamic housing market, many factors influence the value of your Massachusetts home. Knowing whether it’s a buyer’s or seller’s market and using the correct data is critical for setting a competitive price.

Mispricing can result in missed opportunities or extended time on the market. House pricing is the most vital factor in selling a property.

I will provide the following information so you can make the best pricing decisions for your home sale:

  • Why is comparing sold properties the most crucial pricing factor?
  • How do current market conditions impact whether it’s a buyer’s or seller’s market?
  • It is essential to know when to adjust the price of your home.

As a top-producing Massachusetts Realtor for the past thirty-nine years, I can tell you that proper housing pricing is the number one factor for a successful sale. When homes are not priced correctly, they don’t sell. The pricing mistake becomes more noticeable as the days on the market increase. Given this, it’s vital to get it right coming out of the gate. Knowing what your home is worth is crucial to your success.

Let’s dive into the critical aspects of accurately pricing your home.

What to Know About House Pricing

What to Know About House Pricing.

Current Market Conditions: Is It a Buyer’s or Seller’s Market?

Understanding whether it’s a buyer’s or seller’s market is one of the first steps to setting an adequate price for your home.

Here’s how the two scenarios differ:

  • Seller’s Market: In a seller’s market, demand for homes exceeds the supply. There are more buyers than available homes, which often leads to bidding wars, quicker sales, and higher prices. If you’re selling in a seller’s market, you can afford to price your home slightly above market value. Buyers are likelier to make higher offers or waive contingencies to secure a property.
  • Buyer’s Market: A buyer’s market occurs when more homes are sold than buyers. In this scenario, buyers have more leverage, and homes can sit on the market longer. Sellers may need to be more competitive with their pricing to attract offers. Pricing at or slightly below market value can help your home stand out and generate interest.

In neutral markets, supply and demand are balanced. In these conditions, accurate pricing becomes even more critical. Buyers are cautious and less likely to engage in bidding wars.

To determine current market conditions, consult with a real estate professional. Reviewing local data on inventory levels, average time on the market, and recent sale prices is helpful.

Comparative Sold Properties: The Most Vital Factor for Pricing a House

Comparative sold properties, or “comps,” are recently sold homes similar to yours in terms of location, size, condition, and amenities. Using this data is the most accurate way to price your home because it reflects buyer behavior and the price points they are willing to meet in the current market.

When using comps, focus on these critical factors:

  • Location: Proximity is crucial. Homes in the same neighborhood or even on the same street provide the best comparison. Local factors like school districts, amenities, and nearby attractions can significantly impact value.
  • Size and layout: Square footage, number of bedrooms and bathrooms, and overall layout matter when selecting comps. Even if they are in the same area, a 3-bedroom, 2-bath home will not compare well with a 4-bedroom, 3-bath home.
  • Condition and upgrades: A well-maintained home with modern upgrades (like a new kitchen, energy-efficient appliances, or a renovated bathroom) will generally sell for more than a house needing repairs or updating. Adjust for these differences when comparing your home to sold properties.
  • Time frame: The more recent the sale, the better. Markets can change quickly, so focus on homes sold within the last three to six months to get the most accurate idea of what buyers pay.

Under Contract Homes: A Key Supplementary Factor

Under-contract homes, also known as “pending sales,” have received an accepted offer but have not yet closed. These provide additional insight into the current market by showing what buyers are willing to pay today.

While under-contract homes don’t provide final sale prices, they can still be helpful in the following ways:

  • Speed of sale: How quickly a home went under contract strongly indicates buyer demand. If similar homes to yours are going under contract within days or weeks, it’s a sign that demand is high, and you might be able to price your house more aggressively.
  • Price trajectory: If homes under contract were initially listed at a higher price and later reduced, it may suggest that buyers are negotiating lower prices. This is a red flag that your price may need to be more competitive to attract offers.

Remember that under-contract homes are not a final indicator of value. The actual sale price could be lower than the listing price. Still, they are an excellent supplementary factor to sold properties.

Pricing of Current Homes for Sale: The Least Vital Data Point

While pricing your home based on other active listings in your neighborhood may seem intuitive, this is a common mistake.

Homes still on the market have not sold yet, meaning the price may be too high, or the house may have some other issue preventing it from selling.

Here’s why current for-sale homes are the least reliable pricing metric:

  • Asking prices are speculative: Sellers can list their homes at any price they choose, but that doesn’t mean buyers are willing to pay that amount. Many homes will undergo price reductions before they finally sell. I always explain to my clients that what someone wants for their property has nothing to do with its value.
  • Different motivations: Some sellers may overprice their homes in the hope of negotiating down, or they may not be in a rush to sell and are testing the market. Others may have overpriced their homes unintentionally due to poor advice or overestimating their home’s value.
  • Uncertainty in buyer interest: Just because a home is listed at a specific price doesn’t mean buyers are interested. Active listings do not indicate what price buyers are genuinely willing to pay.

Knowing your competition is essential, but don’t base your pricing solely on current listings. Buyers can access the same information and notice if your home is priced significantly higher than similar homes sold.

Data Points That Should Not Be Used for Pricing

Don't Use Zillow For Home Pricing

Don’t Use Zillow For Home Pricing!

Specific data points may seem relevant, but they should not be used to price your home. These include:

  • Zillow estimates (Zestimates): While Zillow offers convenient estimates of home values, its algorithm is often flawed. Zillow cannot account for specific factors like your home’s condition, renovations, or local market trends. As a result, Zestimates can be off by tens of thousands of dollars, giving sellers a false sense of value. Avoid being deceived by an online house value estimate!
  • Assessed value: The assessed value is used by local governments for tax purposes. It often lags behind the real market and may not reflect your home’s current value. Tax assessments may be updated infrequently, and in some areas, they are deliberately lower than market value to reduce homeowner tax burdens.
  • Refinance appraisal: A refinance appraisal is done when a homeowner refinances their mortgage. It’s primarily for the lender’s use and doesn’t reflect what buyers are willing to pay. These appraisals often use outdated data and can undervalue or overvalue your home compared to its market price.

To get an accurate price for your home, stick to data that reflects what buyers in your area are paying for similar homes.

Expert Opinion

Lino Arci, The Lino Arci Team, understands the actual value of real estate doesn’t come from online calculators.

Online estimators like Zillow and Redfin only give estimates based on the limited information they are given. They don’t know about the storm damage, unpermitted jobs, or encroaching neighbors.

They don’t know about the upgraded cabinets, flooring, and finished basement. This means various factors can play into a home’s value. You won’t get the most accurate figure without a local, qualified agent and appraiser assessing the property.

The same goes for assessed value and refinance appraisal. These tactics don’t account for interior examination and a deep analysis of the various elements of a home. Nothing beats the hands-on experience and visualization of a qualified agent.”

When to Adjust Your Price

If your home isn’t selling, it might be time to adjust the price. Here are some critical signs that a price adjustment may be necessary:

  • Lack of showings or offers: If your home has been on the market for 30 days or more without generating much interest, your price may be too high. In most markets, you should expect showings within the first week of listing. If the price is right, offers typically come within the first few weeks.
  • Comparable homes are selling: If homes similar to yours are selling but yours remains unsold, it could be a sign that buyers are passing on your home due to the price. Review the most recent sales to see if your pricing is too high compared to comps.
  • Feedback from agents and buyers: If potential buyers or their agents consistently comment that the home is overpriced, take this feedback seriously. Buyers are comparison shopping, and they’ll notice if your home is priced higher than others in the area.

When adjusting the price, make meaningful changes. A slight 1-2% reduction is often enough to renew interest. However, a more considerable reduction may be necessary in a slow market.

Waiting too long to adjust the price can cause your home to become “stale.” This can make buyers wonder if something is wrong with it.

Conclusion

Setting the right price for your home requires a careful analysis of the current market, comparable sold properties, and under-contract homes.

Avoid using unreliable data points like Zillow estimates, assessed values, or refinance appraisals, as they can mislead you. If your home isn’t attracting offers, consider making a price adjustment based on feedback and recent sales data.

To further ensure a successful sale, consider exploring strategies like home staging and marketing that can help attract the right buyers at the right price.

Always remember that accurate house pricing is crucial in successful home sales.

Please contact me, If you plan on selling your home in the Metrowest, Massachusetts area for an interview.