The Cost of Pricing: How Technology, Psychology and Timing Impact Listing Value

by Jennifer Morrell

Cyber Cents

Just as a person might type in a list of symptoms into an Internet search engine and diagnose himself with a traumatic disease, he also is likely to use the web to create his own selling price for his property. Public access to information about the price of properties, when coupled with estimating tools available to the average consumer, can leave an agent with a bell to un-ring. This is where your expertise and experience are crucial.

“Consumers do have much more information than ever before via the internet,” says Elizabeth King with Dorsey Alston Realtors. “However, not all of the information found on third-party websites is completely accurate, like an estimation of a home’s value. Many of these websites do not take into account recent sales in the neighborhood, and they estimate from the tax records without ever having been inside the home.”

King says the “instant knowledge” of what has recently sold and what the market is doing creates the guidance that only an agent can provide to a homeowner.

Adrian Provost, a broker with Provost International | PalmerHouse Properties, believes most consumers realize the algorithms used by many of these online platforms are far from accurate. So, assuming that homebuyers will be reasonable about balancing their own research with your working knowledge, you have to accurately assess your information as well.

“Those salespeople who rely solely on the software programs may be off a bit with their pricing, if they completely neglect the human element and disregard tangible traits that will affect a property’s valuation,” Provost says.

Castillo feels an informed buyer actually might save you a lot of time and headache. Rather than wanting to view everything out there on the market to evaluate what is appealing and what is not, he and his client can quickly eliminate homes based on understood criteria.

“It’s still easy to dispel the inaccuracy of a ‘Zestimate’ and point out the facts in the light of day,” Castillo says. “But the buyer doing their homework at night, after the kids are in bed, only helps me when we actually get in the car.”

Another weapon you can rely on is the trusty appraisal. “If a home is difficult to price, I always suggest to my sellers to have an appraisal,” says King, who specializes in Buckhead, Brookhaven and other Intown neighborhoods. “Then, we can go from there on setting an accurate price for the home.”

Provost, a licensed appraiser, agrees. He educates consumers on proper property evaluation, explaining that these automated programs aren’t always correct when generating a number.

New School, Old School

Every agent has his best way to price a home. Provost uses “a la mode” real estate software and is a fan of many of the company’s products, including their Total appraisal tool. Castillo uses the trusted method of looking at comparable sales as a guide for pricing a home. It’s the same measure, he points out, that appraisers use. “Ninety-nine percent of the time, the home has to appraise, and those are the same numbers that an appraiser will use,” he says.

“Honestly, I am very ‘old school’ in my pricing strategies,” says King, who learned much about real estate from her mother, a Realtor with 40 years of experience. “Maybe that is why I haven’t adopted some of the new technologies; I have a system that works well for me.”

King uses recent sales comparisons in the neighborhood, market data, and analysis of the current market as tools for pricing her listings. Still, there is no steadfast formula.

“In some instances, I use price-by-square-foot,” she says, “but in older Intown Atlanta neighborhoods, you can’t rely on using that. In Buckhead, Morningside, Virginia Highland, Midtown and Druid Hills, the homes are older and have a charm factor. It is hard to use price-by-square-foot in these homes, as they are all very different.”