Smart Moves by Ellen James Martin

MAKE SURE THE PRICE IS RIGHT WHEN SELLING A HOME

Each year, home values are increasingly subject to neighborhood-by-neighborhood variations, says Richard M. Betts, an expert on real estate economics.

"Some neighborhoods are now hotter than hell and some are still dead," says Betts, who has followed real estate pricing trends for 45 years.

In many communities with excellent public schools, multiple bids over the asking price have become a reality lately. That's because school quality now varies more widely than in the past, and prospective buyers are acutely aware of distinctions due to the ease of obtaining test scores online or through newspaper coverage.

Meanwhile some neighborhoods in remote suburban areas continue to suffer valuation declines. That's because the public is increasingly fearful that gas prices could spike at the pump.

"People worry their commuting costs might soar if they live too far out," Betts says.

Even within the same neighborhood, there are now striking variations in home values based on the relative location and characteristics of properties. For instance, a house on a quiet cul-de-sac could be worth considerably more than a similar one on a busy road in the same community.

Of course, home values have always varied in accord with the specific location and attributes of properties. But Betts says that in the present period those disparities are even more pronounced.

"Since the 2007-2008 economic downturn, value influences have become more intensely local," he says.

Fred Meyer, a veteran real estate broker who's also an appraiser, says the increasingly fine distinctions in property values are due in large measure to the painstaking approach most homebuyers are taking to property selection.

"During the boom times, people were less picky. They figured they could buy any house or condo and its value would automatically rise. Now they're aware this is no longer true, so they're much more cautious," Meyer says.

The increasing variability of home valuations makes it all the more difficult for owners to decide how to mark their properties for sale, especially if they're trying to sell a home in a neighborhood of custom houses.

"Every home is unique -- it's just a matter of how unique," says Betts, who heads his own real estate appraisal firm.

Here are a few pointers for home sellers:

-- Search for a listing agent with a deep knowledge of your area.

When searching for listing agents capable of recommending an accurate price for your property, stick to those who specialize your neighborhood, Betts says.

"Drive the streets and look for for-sale signs. That's one way to find out who's actively working the area within your same zip code," Betts says.

He says you should disabuse yourself of the notion that someone one who scores a high volume of sales in your area will necessarily devote enough time and energy to evaluating your property to make the best possible pricing recommendation.

"Those so-called 'top producers' usually have a lot of assistants working for them. This often means they're spreading themselves thin over a large area. You could wind up working with an assistant who isn't so knowledgeable," Betts says.

-- Seek a minimum of three opinions on the worth of your home.

Much is at stake for homeowners when they decide to place a price tag on their property, Betts says.

A price that's even 10 percent more than what the market will bear is usually a big mistake, he says -- a home that's overpriced from the get-go will be shunned by buyers. In the end, this almost inevitably leads to a later sale and less money for the sellers.

In seeking the correct price for your property, Betts recommends you consult at least three potential listing agents before selecting the ideal one to assist you.

"Don't necessarily choose the agent who recommends the highest price. Remember it's the market, not the agent, that decides the true value of your home," he says.

Betts says home sellers should be aware that some agents will seek to flatter you by recommending a higher list price.

"Some agents use this as a strategy to get more listings ... knowing (the price) will have to be cut later to move the property. This isn't in keeping with your interest as a seller," Betts says.

-- Review the data used by agents to come up with their pricing proposals.

Before making a pricing recommendation, a conscientious listing agent will consider data on recent home sales for comparable properties.

"Which 'comps' the agent picks is critical. You don't want the agent to just use any three properties from your general area. Now that values are so variable neighborhood by neighborhood, the agent should choose comps in your immediate vicinity that are truly very similar," Betts says.

He says it's always wise for agents to examine more information than they will use to produce their opinion of value about a property, known within the real estate profession as a "Comparative Market Analysis," or CMA.

"An agent should examine six or eight comps before choosing the three right ones and then adjusting them for fine distinctions," Betts says.

-- Raise your antenna on how rivals in your market have priced.

Sellers tend to be biased in the belief that their place is better others, and therefore deserves a loftier price. Their emotional attachment to their home fogs their vision.

To better assess the relative value of your property before pricing, Meyer recommends you visit your competition -- homes already on the market in your immediate neighborhood. You can do this by attending public open houses or asking your agent to bring you through.

"It's imperative you become familiar with the other choices buyers have available to them and for what price. If you've been unrealistic in your thinking, this could be a sobering experience. You might find that other houses are much better kept than your house and that your neighbors have made a lot more improvements," he says.

In the course of checking out your rivals, you could discover that a very similar house has been marked down to what your agent considers a sacrificial price in order to get it sold quickly, perhaps due to a divorce or a threatened foreclosure.

After making such a discovery, Meyer says many sellers are tempted to match the underpriced property so as to remain competitive. But he says the better option -- if you're not on a tight moving schedule -- is to simply delay.

"Assuming you and your agent have done your homework and know for sure that the other house is priced below market, I recommend you just wait until the other property goes before you try to sell," Meyer says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)