From the Chicago Tribune:
During the housing boom, many real estate agents found it extraordinarily tough, if not impossible, to come up with even ballpark asking prices for their listings.
“Values were increasing at a pace we had never seen in this area,” said John Duffy of Duffy Real Estate in the Philadelphia area.
For four-plus decades, real estate agents had been used to gradual price appreciation of 3 to 6 percent a year, “and then the boom came along, and we were seeing a much faster and higher appreciation, which made it very difficult to price properties,” Duffy said.
The results: Multiple bids, and prices exceeding what homeowners were asking.
Today’s market is very different. And, Realtors say, the way houses are priced has changed dramatically.
“Homeowners need to price their homes right or they won’t sell,” said Art Herling, Philadelphia-area vice president of Long & Foster real estate company. “Buyers are extremely savvy and cautious, and, as one builder said, ‘It’s hip to be conservative.'”
You must be able to “defend” the asking price, Duffy said. One way is to research similar homes that have sold in the past few months in a neighborhood or town. Also, compare the house with others on the market in the same area.
“It is important for the Realtor and homeowner to be totally honest with the comparison, and make sure you are comparing apples with apples,” Duffy said.
Active listings “will give the seller a bird’s-eye view of what the competition is doing, and what he or she is up against, as a comparative tool,” said John Badalamenti of Prudential Fox & Roach in Wayne, N.J.
Added Laurie R. Phillips of Prudential Fox & Roach in Philadelphia: “When a new buyer is out looking at homes, they will compare the prices of what they are seeing.”
Days on the market is another important factor to consider, Duffy said. If a similar property has been listed for a while, it’s a good indication the house is overpriced.
Looking back at sales from a more robust market is irrelevant, said Joanne Davidow, vice president and office manager at Prudential Fox & Roach in Philadelphia.
“Sellers may be tempted to price a house with what they need, but it is important to price at a realistic range,” Davidow said.