The Fine Art of Pricing a Home
Pricing a house is difficult. Loosely speaking, you begin with a ballpark figure based on the average price per sq. ft. for like-sized homes in your neighborhood, and then adjust it up or down depending on the home’s particulars: is it a studs-out renovation, is there a new garage, does it have an awe-inspiring view? When fine-tuning a listing price, you leave the certainty of mathematics and enter the land of subjectivity (i.e., the real world). Here’s where experience and, dare I say, artistry come into play.
Case in point–two Capitol Hill listings. Both of these homes were originally listed at $800,000 and have since been reduced to $750,000. Based on the listing data and my impressions of each home, I think one is accurately priced. Take a look at each listing and decide for yourself. Which one would you go for if you had a $750K budget?
628 11th Ave E Seattle, WA 98102
4 Bedrooms, 1.75 Baths, 2,990 sq. ft.
Price: $749,950
719 20 Ave E Seattle, WA 98112
4 bedrooms, 2.5 Baths, 3,240 sq. ft.
Price: $750,000
Michael P Lindekugel said:
I am a commercial practitioner. I don’t care if someone buys or sells a home.
I am not surprised. Pricing a home is more about specific market knowledge than complex mathematics. Homes have too many qualitative components that can not be effectively quantified in a rational or meaningful manner. In a normal market, an good agent can price a home within +/- 3% of the eventual sale price. Realistically, I don’t fine tuning a price is possible. Zillow spent an enormous amount of money trying to reduce the pricing process to a mathematical exercise with algorithms. Zillow freely admits they are within +/-10% of the sale price ONLY 60% of the time for Seattle. Not so good agents will struggle with pricing especially when the market is climbing or declining.
September 3, 2008 7:00 AM
John said:
This is too easy.
September 3, 2008 1:31 PM
Piggyback Post: The Fine Art of Pricing a Home | Redfin Seattle Sweet Digs said:
[...] today, our man Rick wrote a pithy post on the delicate balance stricken between instinct and integers in the pricing of homes. He says: [...]
September 4, 2008 9:14 PM