The value of your home is what a reasonable buyer is willing to pay within a reasonable time. A lot of this process has to do with the price of comparable Baltimore and Maryland houses for sale. Setting an asking price requires that you anticipate what buyers would be willing to pay. This requires a close look at those comparables, plus making a realistic assessment of the state of the real estate market itself. Pricing correctly is fundamental to the successful sale of your home.
1. Comparable Sales
Baltimore and Maryland (MD) homes for sale and recent closed sales in your area will usually provide relevant comparable data for pricing your home. Closed sales show "market confirmed" prices, while listing prices indicate the current trend in pricing. Later, when your home is appraised for the buyer's loan, the appraiser will only consider recent closed sales. Asking prices will not be considered. A sales price that is solidly based on recent sales of similar homes will not have a problem when an appraiser later reviews the price. If your home is superior or inferior to most homes in the neighborhood, or if there are few or no nearby sales, then anticipating the responses of potential buyers will be more difficult. In this case, a trial and error strategy may be necessary. This is a sensitive area and requires a realistic assessment of your home and its market.
An important aspect of pricing is an assessment of the state of the Baltimore and MD real estate market. The market may favor buyers or sellers, or be in balance. An indicator of the quality of the market is the number of months of standing inventory in your market and price range. Consider your market area to be all neighborhoods that offer competing choices for your potential buyer. In other words, if you live in Canton, the prices of homes in Federal Hill will have a bearing on the value of your home. The same principal holds true in Timonium and Lutherville or Owings Mills and Reisterstown, and so on.
3. Seller's Market or Buyer's Market?
Seller's Market
Less than six months of standing inventory is considered a seller's market. This is as true in Baltimore and Maryland houses for sale as it is anywhere else. In a seller's market the number of buyers is large in proportion to the number of homes for sale. In other words, the demand for homes is greater than the supply. Buyers must compete with each other for the available inventory. In this scenario multiple offers may be received shortly after a home goes on the market. Prices will trend upward in a climbing market, so pricing slightly above recent sales is appropriate.
Buyer's Market
More than eight months of home inventory is a buyer's market, meaning that the number of buyers is small in proportion to the number of homes for sale. High interest rates, employment decline and excessive building can create this situation. Fewer buyers equal a lower price as sellers compete with each other for the available buyers. Prices trend downward. In a falling market, prices should be set at the lower end of the range, because time works against you. In six months, if your home is still on the market, prices may be even lower.
4. Should you price your Baltimore or MD home high, and hope for an offer?
Houses should not be priced over the market for several reasons:
First, your home will be shown to the wrong group of buyers.
Second, you’ll inadvertently help to sell the competition. Your high price will convince buyers that another home is a good value.
Lastly, your "days on the market" is evident to buyers, and it will be an important factor that affects their decisions, including how much they ultimately offer. Your best leverage occurs during the early marketing period.
5. Market Feedback
The best affirmation of correct pricing is second looks from buyers. This indicates that your home appeals to them in the price range. There may be a few "nibbles" before a buyer is ready to act. It helps to get feedback from Realtors and potential buyers. Keep in mind that they will often be reluctant to say "negative" things. The summary of feedback is more important than what they say. Are you getting "nice" rejections or second looks? How will you know if the price is incorrect? You may have steady showings, but lukewarm responses. This indicates that buyers have more competitively priced choices. Or, you may have very few showings. In this case, the buyer pool for your neighborhood, or for the style or condition of your home is small. This requires an aggressive pricing strategy and a longer marketing time. Remember that a small buyer pool, for any reason, is a "buyer's market" and you must adjust to meet it.
6. Time on Market
There is no uniform time frame for marketing Baltimore real estate or for selling any Maryland homes at a set price. Usually 8-10 showings is a reasonable sample (that’s about 2-6 weeks in a balanced market). About 30 days of marketing time, at a given price, is a good rule of thumb. This may be too short, however, if you have an unusual or very high-end home for which there is a small market. On the other hand, 30 days may be too long to wait if you need to sell fast.
See an exlusive video of Marc Witman, Partner with Yerman Witman Gaines & Conklin Realty, discussing the growing shadow inventory and its impact on the market.
