The Art of Pricing a Home
I’ve often said that pricing a home is an art, not a science. And now, in Boston, that’s even more true than it has ever been. It’s too soon to make sweeping generalizations about the market in this re-opening phase, but what can be said is that the market is being unpredictable and quirky.
As we talk to sellers, our conversation about pricing is very different than it was a year ago. Last year, in a low inventory/high demand market we had the ability to push the pricing on a home and be aggressive. That’s not the case right now and in large part because of the uncertainty in our world. Where uncertainty lives, so does hesitancy and lower confidence.
When pricing a home, we look at a few different things – comparable properties that have sold recently and similar homes currently for sale. The sold data tells us what a buyer has been willing to pay for a home in the recent past. This can be a little tricky right now because what a buyer paid in March – pre-Covid – might be very different to what a buyer would pay in August – post-Covid shut down. So, we need to be careful in going back too far to look at comparable sales.
In some respects, looking at similar competing properties provides better data points for pricing strategy. If a similar home has been on the market for 6 weeks and has already had a price reduction, it gives us a great deal of information about how the buyer pool is responding to the price.
After being in a low inventory market for several years, we’re seeing a slow-down in the pace at which buyers are making decisions. This is causing properties to take longer to sell and thereby increasing the number of available properties on the market. Greater inventory creates greater competition amongst sellers and necessarily causes prices to become more competitive.
Understanding and interpreting market data is no small task. It takes skill, experience and understanding. At Donnelly + Co., our team of experienced agents are adept at advising our clients on appropriate pricing strategy. We’ll continue to monitor this ever-changing market to help our clients the best way we can.
