Study competition before pricing your house

SMART MOVES

May 24, 1992|By ELLEN JAMES MARTIN

Supermarkets do it. Car dealers do it. Those who sell televisions do it. All of them watch the competition closely.

And so should the sellers of homes, real estate specialists advise.

"It's critical that sellers know the competition so they can intelligently market their own property," says Douglas Rittenhouse, broker-owner of Century 21-C.C. Rittenhouse in Catonsville.

Too many sellers are ego-bound and believe they are selling their homes in a vacuum for the price they believe a property is worth, realty specialists say. But buyers are always making comparisons with other homes in the same or nearby neighborhoods.

"Buyers make their decisions based on the choices in the marketplace. Virtually no buyer looks at just one house," Mr. Rittenhouse stresses.

Unless you're superhuman, you no doubt have a subjective view of your own home. If you love gardening, you will place a premium on the carefully tended flower beds and assume others will do the same. In fact, you may be tempted to add a few hundred dollars to your list price because of your pride in the flowers.

But the prospects who troop through your home won't see the pride you've instilled in your flower beds. And they are likely to be highly resistant to paying hundreds of dollars more for the place just because of the flowers. This will be especially true if another for-sale property in the neighborhood, owned by a landscape architect, offers even nicer gardens.

"You have to put yourself in the shoes of a buyer and look at the competition the way the buyer does," Mr. Rittenhouse counsels.

Human nature being what it is, the process of making a home-buying decision is largely a process of self-justification, observes Carl D. Johnson, a broker-associate with the RE/MAX International chain.

If your home is priced at the same level as your neighbor's but has fewer upgrades and appears to be in inferior condition, the prospect will undoubtedly select the neighbor's place. But if the reverse is true, he'll probably buy your home.

"Someone else is going to help sell your house or you're going to help sell theirs," Mr. Johnson says.

Why not get a handle on your rivals before you go to market? To do that, real estate experts make these suggestions:

* Survey the competition in your immediate area.

Ask your agent to pull listings of homes in your immediate area (a one- to three-mile radius) that are roughly comparable in style and price to your own, Mr. Johnson advises. (As a rule of thumb, he suggests that if you're selling a lower-range house, you look at listings for homes within $5,000 above or below your own; for a middle-range home, $10,000 above or below your own; and for an upper-range home, $50,000 above or below your own.)

Once you've located a half-dozen comparable listings, ask your agent to take you through the other property or visit public open houses for the other homes. Then try to compare your home as objectively as possible with the others.

You needn't feel sheepish about about visiting others' homes. You're not snooping on neighbors, you're involving yourself in a business transaction and checking out the competition is a perfectly normal business practice, points out Mimi Selig, broker-owner of three ERA Realty offices based in Rockville.

When you assess your home in competition with the others, don't forget to factor in the financing packages available for the other homes, Ms. Selig says. For example, does the other property offer an assumable, no-qualifying mortgage? Is another seller offering owner financing? If so, those homes could be more attractive to a buyer.

* Use the information you gather from your tour of other properties to improve your own home for sale.

When you see how well another ranch-style house looks because it's been freshly painted throughout the interior, you may be inspired to paint your own home. Ditto when you see the effect of new carpeting in the living room of a comparable property.

Seeing your rivals' upgrades should, in some cases, be a humbling experience. Has the other family installed new almond-colored appliances while you're still using the same 15-year-old avocado models? Have they installed a second fireplace in the family room? If your house is frankly below the standard of the other property, you'd be foolish not to take that into account when you price your home for sale. There's no point pretending buyers won't notice the difference.

* Consider pricing your house slightly under the competition -- even if it's a little better.

People love to think they're getting a deal, points out Mr. Johnson, the RE/MAX broker-associate. Price your property just $500 to $1,000 below comparable or slightly inferior homes in the same neighborhood and you can anticipate a more rapid sale than you could otherwise obtain, he says.

Are you giving away the store when you price your home below rival properties? Not necessarily. Remember that the seller with the overpriced seller often settles for less in the long run than the seller of the well-priced house, Mr. Johnson notes.

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