One of the biggest selling mistakes an owner of Boston downtown real estate can make is pricing their condominium incorrectly when it first goes on the real estate market. Unfortunately, it’s a mistake that happens all the time because there’s no perfect formula for pricing a Boston condo for sale.
Home Owners Overvalue by 8%.
According to the Journal of Housing Economics home owners on average value their properties 8% higher than the home’s actual market value.
Real Estate Value vs. Real Estate Sales Price
Before the Boston condo for sale actually sells, any dollar amount attached to it is not actually a price — it’s a conceived value.
What’s the difference? A value is what we think your Boston Charles River Park condo can sell for. The value is not up for negotiation. However, it’s the perceived difference in value that drives the negotiation when a buyer enters the picture. The final dollar amount that the buyer and seller agree on is the price of the Boston downtown condo
Here’s an example: The seller of a 1.5 bedroom Beacon Hill condo is worth $650,000, the owner added marble countertops and updated the bathroom. A Boston downtown real estate agent runs a comparative market analysis and finds that the home could sell for somewhere around $630,000. They agree on a listing price (still a value) of $640,000. However, the first qualified buyer who comes along just wants a 1.5 bedroom condo for sale in Beacon Hill; the buyer couldn’t care less about marble or the bathroom update. The buyers’ agent write up an offer for $600,000 even.
At this point, what we have are two values: What the seller and her real estate agent think the Beacon Hill condo for sale is worth ($650,000), and what the buyer thinks the home is worth ($600,000). Neither is incorrect, but we still don’t have a price.
After some negotiations, the homeowner agrees to sell her home for $625,000. Now we have a price: $625,000 is the actual amount that changes hands. It’s also the most important number in the Boston downtown real estate market.
Determining Boston Downtown Real Estate Values
Why does the sales price matter so much? It’s the number that all other home valuations are based on. Taken together, the individual prices that people are willing to pay for any of the Beacon Hill condos for sale. The Boston downtown real estate market determine the value of future homes. It all comes back to the Comparative Market Analysis I mentioned in previous Boston real estate blog posts, or CMA. It’s the most powerful tool in a real estate agent’s toolkit. A good CMA will take into account:
- The final sales price of similar homes listed in the neighborhood.
- The current market temperature: How fast are buyers swooping up Boston downtown real estate for sale?
- The real estate agent’s own experience selling homes in that price range, neighborhood, age range, etc.
Of course, the final listing price recommendation won’t be based on the CMA alone. The agent should also take into account the homeowner’s motivation to sell — homes sell faster when the listing price is low. And, of course, as real estate agents we can make recommendations all day long, but the seller has the final say when it comes to the final listing price.
Curious what your Charles River Park condo is worth on the Boston downtown real estate market? Call us today!
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- For more info call Janet Lamb or John Ford at 617-721-9504/ 617-595-3712