Accurate Market Analysis
How to set listing prices, offer prices
“This house seems most likely to sell between $680,000 and $720,000.”
“Since I have the time to spare, it would be okay to start from a higher level.
How about $735,000?”
“Because it’s not an atmosphere that buyers will suddenly flock,
I think it would be nice to review it.”
This is part of a typical conversation with a seller to prepare for marketing. At the conclusion, it may seem simple, but there are many tasks that are not visible behind the scenes. The following explains the importance of accurate price analysis. At the bottom, you'll also find information on the specific process and principles for determining the price analysis, listing pricing, and bargaining strategy. (The same principle applies when determining the offer price from the buyer's point of view.)
1. One of the most necessary things for a successful real estate sale
In the end, the most important thing in real estate sales is to sell expensive and buy cheap. In order to sell expensive and buy cheap, in many cases, they tend to go out hard. Listing prices start high, and offer prices go down terribly. Even though sellers and buyers do not know well, there are times when agents take the lead and go in that direction. Then sellers or buyers like it right now. The feeling of being a strong agent who truly cares for my rights and interests is never bad.
However, in this case, almost without exception, the wall of reality is realized and the expectation ends in disappointment. Glad it ends in disappointment. Doing so can ruin the deal itself. The seller cannot sell a house while trying to get a better offer even though a good offer has already been received. This may be the case when a buyer is already trying to get a better price and can't buy a house at all. There are quite a lot of these things.
The real key to selling at the best price (or buying at the lowest price) is not to go "hard", but to go "exactly." "Accurately" grasping the market price of a selling or buying house is the most important preparation for a "strong" bargain. One of the most important things for a successful real estate sale is accurate market analysis.
2. More difficult work than expected
It is no easy task to judge the market price precisely like this and to set up an appropriate bargaining strategy according to it. (Not to mention sellers and buyers) It is a big mistake to think that even real estate agents are to some extent basic. There are many agents who do well, but there are more agents who are not. Sometimes it is relatively easy to have a lot of data for similar houses sold around, but in many cases it is difficult enough to have to worry about staying up at night. There are not one or two variables to be weighed.
Customers have no way of knowing this complicated and difficult inside. This is because even if the agent hasn't gotten a sense of the market price yet, he can throw a number roughly and proceed with the work.
3. Three conditions for good market analysis
Reality: I don't even need to explain the importance of realism to grasp the exact market price. Of course, the best way to get a sense of reality is to go to see similar houses around you. It's a job for buyers to go to the house anyway (so buyers have a basic sense of realism and relatively less wandering in this area than sellers). (The same is true for agents. Even in a neighborhood that the agent knows well, you must aim at the house and check the atmosphere of the market every time.)
Analytical power: You need to compare and analyze a lot of data and numbers. Most sellers and buyers have no experience and it is almost impossible to maintain complete objectivity, so the help of experts is essential.
Conscience: The third is about the agent. If the agent's interest is only on commission, he may not even be interested in accurate price analysis, or even knowing it can deceive the customer. We believe that this is one of the most important things for accurate market analysis, as sellers and buyers are highly dependent on agents.
Price Analysis Guide
1. Factors that Affect House Price
Neighborhood and location are the most important factors in determining the price of a house. This is outside the control of the seller or agent. But, with the seller
Agents can do the job to highlight and inform potential buyers of the good things about the neighborhood.
The condition of a house can be classified into two broad categories. What can't be fixed and what can be fixed. For example, the direction or structure of the house is difficult to fix. On the other hand, old carpets, roofs, and unmaintained backyards are things that can be fixed. Even a house of the same size in the same neighborhood can vary in price from thousands to tens of thousands of dollars depending on the condition of the house. This is where sellers and agents can control 50%. Houses where sellers and agents are head-to-head together, hard-worked, cleaned, and refurbished houses, and houses that are not, can be quite different in terms of price and sales terms.
Depending on the job market, interest rates, etc., the real estate market continues to change. This is something that sellers or agents cannot control at all. The wisest is to be faithful to the masses. For example, if you stick to the price of the seller's market while you have already returned to the buyer's market, the trend is reversed, and a lot of energy and time can be wasted.
Housing Promotion (Marketing)
Even in the same house, there can be a big difference between showing and selling to 10 people and showing and selling to 100 people. Comprehensive and effective marketing is the only thing that can realize the best price allowed by neighborhood/location, home condition, and market trends. This has 100% control for sellers and agents. And this is the biggest reason to hire a good agent.
2. Factors that do not Affect House Price
The price I want and need (if it doesn't match reality, it's just a wish.)
The attachment I have for home (the market is cool)
The price my neighbors and friends tell me (Pricing is a bit more complicated and requires expertise than you think.)
The cost of my investment (the buyer's formula does not include any calculation of the seller's investment cost...)
Houses currently on the market at Overprice (they are meaningless numbers before they are sold).
The above five things are too easy. Of course, even Samcheok-dong knows that you shouldn't sell your house based on these thoughts. However, in practice, I have never seen a case in which at least one of these five does not matter. The number of real estate transactions is so large that easy things like this become difficult and complex.
3. CMA: Comparative Market Analysis
The market value of private homes is investigated through a method called Comparative Market Analysis (CMA).
CMA has been among the similar houses around
Sold House (Sold)
House where the contract is currently in progress (Pending/Backup)
House currently on the market (Active) (price not yet verified)
Selling but not selling or not (Withdrawn/Cancelled/Expired)
It is a method of synthesizing, comparing, analyzing, and finding out the market value of the house that you can receive if you put this house on the market.
Anyone who owns a home and is interested in real estate is much more familiar with CMA than you think. “How much our next door sold, and our house is in a better condition than that house, so we can get how much… If you've ever done a calculation like "", you've already done CMA. The basic idea is that, but doing an accurate CMA is by no means an easy task. In difficult cases, there can be enough work to be done to keep the night up.
CMA is anti-science, anti-art. Not just looking at numbers, it is a work that requires a real sense and realism of the neighborhood, houses, and real estate market trends.
And the completion of CMA is real. It is only after placing it on the market and seeing buyers' reactions and receiving offers to accurately judge the price of our house. If the initial CMA is wrong, you need to clear your mind quickly and adapt to the market.
4. Market Value Range
It is good to think of the price as a range (e.g. $510,000-$540,000) rather than a single number (e.g. $525,000).
No one knows in advance exactly how much the house will sell for. If you like one specific price, you lose your flexibility in bargaining, and you may feel like you're losing money while getting a fair price. As I'll explain below, thinking in terms of scope makes it easier to come up with strategies for different situations.
5. Listing Pricing and Bargaining Strategies
The basic formula for listing prices is to take the bargain into account and set it slightly higher than the desired price. And you can decide the final listing price and bargaining strategy by considering the following situations and variables.
If the seller has a lot of time
It can be put out as the upper limit of the price range.
If the seller is out of time
It can be put out as the lower limit of the price range.
When the market is hot (Seller's Market)
Because buyers gather so quickly, there is some flexibility in setting listing prices.
Even if the price is set to Overprice or Underprice, automatic market correction is possible (Immediate Market
Correction) is possible.
Set the listing price a little higher than the house sold before
When the market is cold (Buyer's Market)
Because it takes time for buyers to gather, there is little flexibility in setting listing prices. The exact price setting
I need more.
Set your listing price a little lower than your previously sold home.
Bargaining Strategy (Offer Deadline)
You can set an Offer Deadline to receive and review offers for as long as possible. If a good offer doesn't come in within a set amount of time, it can be counterproductive, so it's a little risky method. This is a bargaining strategy that can be used when the market is hot, or at very attractive prices. To use this method, it is a good idea to set the listing price close to the lower limit of the price range.
Even if you don't have a formal auction format, if you put the price low, you will naturally create an auction atmosphere and increase the price.
Goes up. It's a method that seasoned agents use quite a bit. That said, you shouldn't use it anytime.
Listing price range
Sometimes, based on the price range, the listing price itself is put in a range (e.g. $790,000-$830,000). When
So it could be a good strategy.
Listing price adjustment
During the first 1-2 weeks, you can see the market's reaction and adjust the price if necessary. However, the first 1-2 weeks should not be viewed as a market test/adjustment period in the first place. It is important to start with the correct listing price through a thorough preparation process, but you must have the wisdom to respond flexibly to market liquidity and uncertainty.
Copyright 2021 Boston Choi All rights reserved.