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  • Writer's pictureKevin Peterson

Everything You Need to Know to Price Your SF Bay Area Home and Get Top Dollar

Updated: Feb 24

Table of Contents:

  1. Steps to Pricing Your Home

    1. Rough Gauge of Value - The Online Estimate 

    2. Analyze Your Real Estate Agent’s CMA

    3. Identifying Your Goldilocks Price Range

  2. Factors That Will Impact Your Sales Price 

  3. Eight Mistakes When Listing Your Home

  4. What About Pricing for a Bidding War? 

  5. Will Your Home Appraise?


 


Anathema (noun) - “something intensely disliked or loathed.”


For a home seller in the SF Bay Area, anathema most likely would be:

  1. Their home sitting on the market longer than the average

  2. Their home that falls out of contract and has to go back to the market


Why is sitting too long or falling out of contract bad for sellers? 

  • Overpricing their home and then dropping the price several times while it sits on the market usually leads to selling the home at a much lower price than what they originally should have asked for. 

  • The longer a home is on the market, the deeper the discount is likely to be off the original price. 


Experienced real estate agents know - pricing a home appropriately from the start is critical to getting it sold at the best price. That’s why top agents sell your home for 9.9% more and close 1.8x times faster than the average realtor. (Source: Homelight)


In this article, we’ll break down the step-by-step process for how to price your home to sell for top dollar here in the SF Bay Area. So whether you are in San Francisco, the Peninsula, South Bay, or East Bay, you’ll want to read this article to the end.



1. Rough Gauge of Value - The Online Estimate 

Zillow, Redfin, Trulia, etc. use automated valuation models (AVMs) that analyze public data and use algorithms to generate an estimated value based on factors such as recent sales data, property characteristics, and market trends. This will get you in the rough ballpark for how much your home is worth. 


However, these AVMs may not take into account the unique features or condition of the property and location which means their accuracy will vary. In fact, many of these AVMs can only promise an accuracy of 90% which means your final price could be off by 10%. 


So next step - reach out to your trusted real estate agent.



2. Analyze Your Real Estate Agent’s CMA

A Comparative Market Analysis (CMA) is prepared by your real estate agent. They use their expertise and local market knowledge to select comps that closely resemble the subject property and adjust for differences. 


CMAs provide a more personalized and detailed assessment of a property's value, taking into consideration factors that AVMs may overlook such as recent sales data, active listings, geographic differences and market conditions specific to the property's location. Additionally, the CMA take into account a property's characteristics, such as square footage, layout and condition when comparing recently active, pending, and sold homes (i.e. comps).


If you were to run the comps on your own, comparable properties should roughly fit into the following criteria:

  • Be within ¼ to ½ of a mile from your home.

  • Have been sold within the last 3 months.

  • Be roughly the same age as your property.

  • Have square footage within 10 percent of yours. So, if your home is 1,500 square feet, you should look at homes between 1,350 and 1,650 square feet.

  • Pay attention to neighborhood dividing lines and physical barriers, such as major streets, freeways, or railroads. Don't compare inventory from the "other side of the tracks”, different cities or school zones.



3. Identifying Your "Goldilocks" Price Range

If you price too high, you’ll discourage prospective buyers from bidding. If you price too low, you may set the expectations that the house is not as valuable as it should be. So just like the children's story "Goldilocks & The 3 Bears", finding the sweet spot / competitive price range in the middle will attract the most buyers while maximizing value.


A few tips:

  • Don’t let your asking price lump you in with the competition; rather you want to stand out in real estate searches. If your competition is all at $1.89M, you may want to come in at $1.85M. 

  • Ensure your price is optimized for online searches; if you price your home at $2,001,000, you could be missing out on buyers that capped their search at $1,999,000 for just an extra $2,000.

  • Avoid overly specific figures that may raise questions from buyers like $1,777,867.

  • Top real estate agent with great relationship skills are able to glean valuable information from Pending homes.

  • Be familiar with the competition - Go walk through active listings so you can see what buyers will see when they visit. Make note of what you like and dislike about the properties, as well as the general feeling you got when entering the homes. Ask yourself why a buyer would or would not prefer your home over any of these others, then adjust your price accordingly.



Factors That Will Impact Your Sales Price 


Your Selling Motivations

Consider your reasons for selling when determining your price range. If you need to move quickly, it might be beneficial to lower your starting price, so you’re able to attract more aggressive offers.


Market Conditions

Consider seasonality (Spring is typically the biggest gain from the prior year’s numbers), inventory levels, and market conditions when setting your price. All great reasons to be in touch with your real estate agent to help advise you months or even years ahead.



Eight Mistakes When Listing a Home

  1. Overvaluing renovations - Not all updates are money producing so working with your real estate agent before completing updates is key to knowing what is the best use of your money and time.

  2. Letting emotions override logic.

  3. NOT highlighting unique features and amenities to justify your asking price.

  4. NOT putting yourself in the buyer’s shoes in order to see how they would perceive your home's value.

  5. NOT addressing issues / potential flaws raised in the inspection report that could affect the home's value.

  6. NOT reviewing expired listings from your area to gain insights on pricing.

  7. Listing your home high for a couple of weeks and then lowering it. The first two weeks of a property's market debut is the time when the listing agent features the property at their weekly brokers meeting. It is crucial to get the other brokers excited about the value of your home. They will spread the word of your property like wildfire if the brokers see value. The objective at this stage should be to tap into the huge reservoir of buyers who have been in the market for several months and are now ready to buy.

  8. Listing your home high to create bargaining room. The main problem with this approach is that an incorrect price will target the wrong buyers. As real estate agents search the MLS, the home will appear in a higher price range. This will result in the home seeming like a poor value in comparison to others in this range. Meanwhile, the home will be left out of a search done by good buyers in the real price range. It is likely that the very people who are in the market for your home, won't even know about it.



What About Pricing for a Bidding War? 

There’s a difference between “How much can I list my house for?” and “How much can I sell my house for?” Sometimes, especially in big seller’s markets, sellers list their homes for an attractively low asking price, in hopes of driving up the eventual sales price with a bidding war.


While this strategy can work, there’s always a risk of the financing falling through on your highest-priced offer, especially if your home doesn’t end up appraising for the offered amount. When that happens, you’ve jeopardized lower offers, and potential buyers may wonder if there’s a flaw in your home that made your deal fall through.


When evaluating offers, always look carefully at all aspects of each offer before deciding which one to accept — there are more factors than just the price offered.


Read our article HERE to understand the risks and benefits of pricing low to incite a bidding war.



Will Your Home Appraise? 

Appraisers are neutral third party companies who value your home at current prices and help banks determine how much to loan the borrower, ie. home buyer.


Once under contract, we as your listing agent will meet the bank’s appraiser at your property with a detailed packet of information that we create with input from you to show off the value of your home. The appraiser is typically in and out within 15 minutes so we make sure they leave with the most important information about the home and local surroundings that influence price.


If the appraisal for your home comes in lower than expected, the buyer can try to negotiate a lower sales price if they have an Appraisal Contingency. The seller isn't required to reduce the sales price, but the buyer is free to walk away if they aren't happy with the difference between the appraised value and the sales price. The seller could also ask for a second appraisal, but the buyer doesn't need to agree to that.

If there is no Appraisal Contingency, then the buyer will need to come out of pocket even more. Knowing your potential buyer's financial situation is something we as your listing agent find out well before we accept their offer.



Conclusion

Pricing your home accurately is paramount for a successful sale in the competitive SF Bay Area market.


By utilizing tools like comparative market analysis and heeding the advice of experienced real estate agents, sellers can position their homes to attract buyers and maximize value. However, it's essential to remain flexible and open to adjusting pricing strategies based on market feedback and conditions.


With careful consideration of pricing, sellers can navigate the complexities of the market with confidence, ultimately achieving their desired outcomes and securing the best possible sales results for their properties.

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