We don’t buy houses by the square foot

We buy many things by the pound.

Meat, Cheese, Dog food . . .

or by the volume . . . Beer, Milk, Gravel . . .

Pricing houses is more art than science.

Sure, many REALTORS will initially do Price/Square foot analysis when working with a home Seller to determine a “great” listing price, but that only gets the valuation “in the ball park.”

Using Price/Square Foot, we can justify $400,000 or $600,000 for the SAME house.

Many markets do not publish square footage of houses. Here in Middle Tennessee, we do.

So . . . our P/SF analysis gets us into that range of $400-600K . . . Where from here?

What’s our perfect listing price?

I believe the “PERFECT” listing price is the price that results in the Seller reaching purchase agreement with a Buyer within 3-5 weeks of hitting the market. This price is low enough to attract ready, willing, and able Buyers to come take a look . . . and high enough to fetch the highest amount possible and best terms for the Seller.

Why do I say 3-5 weeks? (Some folks may not agree with me that’s “acceptable” in this HOT market). I believe the best price is the one that comes from “full exposure” to the entire market.

A house sold “off the market” may have gotten a higher price if it were marketed to to the full array of potential Buyers.

A house sold in 3 hours with multiple offers OVER the listing price may mean one of the following 2 things:

1) Maybe not listed at a high enough price

2) Has a higher likelihood of not getting to the closing table because of potential for “Buyer’s remorse for paying “too much” . . . or inability to appraise thereby putting the kibosh on the loan.

The “Art of pricing” requires accounting for myriad factors:

  • The observable condition and cleanliness of the house
  • The degree of appropriate Updating and decor
  • The exterior – Yard and landscaping – Pool, Outdoor living areas, fencing
  • The immediate neighbors and the perceived neighborliness of them
  • The street
  • The Neighborhood
  • Community amenities
  • Schools
  • Proximity to shopping, places of worship, parks & Recreation
  • among MANY others.

I believe that there’s an oft neglected component of smart pricing . . .

We’ve used P/SF to get us in the range . . . and then done analysis only within that range.

Should we not also concern ourselves with the rest of the market in that area? What’s going on above $600K and below $400K?

What’s trending?

Sometimes we’ll see that everything below $400K is selling in minutes with almost no available inventory . . . In our range $400-$600, there might be 3-5 weeks of inventory and above $600K 6 months or more of inventory . . . These are things we should KNOW before determining our price.

Here’s the gut-wrenching truth . . . After considering all of the above, the final listing price boils down to “gut feeling” of REALTOR and Seller.

OBTW – What the Seller wants or needs has no bearing whatsoever on what the market is willing to pay.


Just speaking truth . . . Don’t shoot the messenger.

Whether in a HOT market or a chilly market, all of the pricing principles above apply.

We REALTORS are strategists, not seers or scientists.

Here at Pareto Realty, we have MANY pricing conversations in the office as we collaborate with each other to help our Home Sellers price their houses at that perfect 3-5 week price.

It ain’t rocket science . . .

Published by Barry Owen

Strategist-CEO of Pareto Realty Real estate sales Professional Inviter-Facilitator-Practicer of Open Space Technology Opening safe space for people & organizations to self-organize around issues & opportunities BarryOwen.US Invite-Listen-Love

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