The Price is Right

The first question a home seller asks me is: “What is my home worth?”

It’s a fair question, but one without a clear answer. Even in a competitive market like San Francisco, houses sell below, above, or right at the list price. And if they’re overpriced, they can sit on the market for a very long time. And that’s definitely NOT a good look.

Agent or Algorithm

To find the sweet spot for price, many people can’t resist automated valuation models and online price calculators. But the truth is, really understanding the market is critical when determining the price for a home.

Trusting that process to an algorithm only gives you part of the picture, and possibly an inaccurate figure. Relying only on these tools will set your expectations too high, or even too low, for what the market will deliver. 

Determining the Right Price

So, how do I figure out the right price when I list a home, and how do I determine what a home is really worth? Getting the right price is a little bit of science, but also a bit of an art form. 

Here are a few things I do to understand a home’s value in the market and set a recommended list price:

1. Evaluate the Home

First, I’ll start with getting a clear picture of the basic stats for the home (square footage, bedrooms, bathrooms, parking, etc.) and evaluating its physical condition and location.

I’ll look at everything from the home’s proximity to shops, parks, transportation, and freeways, to its outdoor space, light, flow, aesthetics, and development potential. Even small details like the cabinetry, finishes, tile work, and lighting fixtures come into play.

2. Assess Comparable Properties

Next, I review the MLS to find the most similar properties that have sold to inform my valuation of the home. 

What makes a property a desirable comparable?

• Similar stats/size
• In the same or similar neighborhood
• Equivalent features and amenities
• Sold in the last six months, ideally

Reviewing the most recent comparables is essential since buyers, their agents, and appraisers are also looking at these properties. 

3. Look at Neighborhood Trends

Additionally, I analyze sales in the neighborhood to see how nearby properties perform. Usually, I’ll look at how much properties are selling over list price, as well as how quickly properties are selling; these are great indicators of demand. 

If I am selling a property that is unusual and there aren’t similar properties nearby, I will look at longer term trends or properties outside of a one mile radius, but in comparable neighborhoods.

4. Understand Current Demand in the Market

In certain neighborhoods, I can count on demand always being strong (hello, Noe Valley). As a result, I can price a home below market value—but within neighborhood trends—and expect the price to be driven up by demand.

In neighborhoods where demand might not be as high I would not expect to receive multiple offers. If this is the likely scenario, I will recommend a price that is closer to, if not at, value. This is often called transparent pricing. 

The Golden Rule is The Market Rules

Ultimately, no matter what I recommend, the market decides the final price. If my pricing is too low, demand and the market will bring the price to where it should be. 

If a property doesn’t sell because the price is too high, adjustments will need to be made within a reasonable amount of time.

Above all, I try to manage expectations and encourage my clients to remain flexible. If things don’t go our way and we’re not getting offers, there are back-up strategies we can use to get a good price and move a property.

Even in a hot market like San Francisco, accurate pricing and property preparations are essential. And with thorough research and familiarity with the market and neighborhood, I can price a home in the best possible way for the best possible results.