This summer, two houses on the same suburban street went up for sale on the same day. One -- a farmhouse style property with few updates -- sold within a week for the full list price. The other -- a stately colonial with numerous luxury improvements -- still languishes unsold.
Why did one property fly off the market while the other seems to scare away buyers? Eric Tyson, a personal finance expert, says the difference was undoubtedly that one was priced correctly from the outset, while the other was overpriced.
"Overprice your place and it can easily get a tainted reputation," says Tyson, co-author of "House Selling for Dummies" and other real estate books. "People will start asking what's wrong with that house? And the number of showings will slow down or come to a complete halt."
He says the sellers of the colonial house in this true story are now being punished for trying to push their opening list price above what comparable properties in the same neighborhood have fetched in recent months.
"Against the advice of their listing agents, a fair number of sellers engage in what's called 'needs-based' pricing," Tyson says. "Rather than face reality, they price for the net dollars they want for retirement or to buy a better house.
Here are a few pointers in regard to pricing:
-- Acknowledge the importance of proper pricing.
Tom Early, a long-time real estate broker, says that even in hot neighborhoods, the current generation of buyers is extremely price-conscious.
"Buyers today are no fools," he says. "They haven't forgotten the big drop off in real estate values that occurred during the financial crisis. So they take a very calculating approach when considering a purchase."
Despite tight inventories of homes available for sale in many communities, buyers will readily brush aside a property they perceive to be overpriced. Early says a real estate agent who recommends the true value of a property is an invaluable ally to owners in their quest to sell successfully.
"A house that's priced too high when it first hits the market can get a serious stigma and will ultimately go for less than it would have if fairly priced from the beginning," Early says.
-- Seek a general idea on value before engaging a listing agent.
These days there are multiple websites offering a free and immediate assessment of home values. One of the best known is Zillow.com.
Early cautions that such "fast pricing" sites can't be expected to yield a definitive answer on the value of your property. Still, they're a good starting point.
Another way to get a feel for prevailing prices before engaging an agent is to attend open houses in your community.
"It's always tremendously helpful to view directly how others in your same neighborhood have priced their property," Early says.
-- Meet with at least three real estate agents before hiring one.
When it's their turn to sell a home, many owners simply default to a trusted friend or relative who happens to be in the real estate business. But Early strongly advises against choosing an agent from your inner circle -- even if that person has sold many nearby properties.
"The reality is that it's hard for a friend or relative to tell you the unvarnished truth about market value or to advise you on changes you need to get your house sold," he says.
Even so, Early says your friends and relatives, along with neighbors, can be a good source for helping you create a short list of candidates to interview.
Ask each agent to give you a candid assessment on the condition of your place, as well as a pricing recommendation. Find out if they based their price suggestion on recent sales of comparable homes in the neighborhood and if so, which ones.
-- Ask for data on the agents' track records on pricing.
One way to size up the pricing aptitude of prospective agents is to examine a few key numbers that reflect their track record on prior sales. Of particular importance are "list-to-sale" statistics. These compare the original asking price against the sum ultimately paid by the buyers.
If the agent is routinely making realistic price recommendations, there should be relatively little disparity between the original list price and the final sale price.
"There shouldn't be much difference at all if the agent hit the target right from the start," Early says.
-- Don't go into denial on a well-grounded assessment of your home's value.
Some sellers are convinced that real estate agents are inclined to recommend a low price in hopes of scoring a quick sale. But Early says the greater risk is that an occasional agent will push for too high a price in hopes of attracting your business.
"Most listing agents deal honestly and won't try to sweet talk you to capture your listing. But watch out for those few who would take you down a primrose path," he says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)