List Price Isn’t Value: Price the House Before Your Buyer Offers

Buyers are told the list price is where to start. Really it's just the seller's opening position, set with whatever mix of data, hope and agent advice went into it. Your buyer deserves a number that comes from the comps.

Most buyer's agents pull a few sales and talk the buyer through them in the car. That's better than nothing, but it's hard to remember at 10pm when they're deciding how high to go. A pricing guide puts it on paper.

Build the guide before you write the offer

Treat the house the way you would if you were listing it:

1. Choose your comps.

2. Adjust them for what's different.

3. Get a value range.

You've just been through the house with your buyer, so you know more about its condition than any listing photos or algorithm will show.

It takes a few minutes, and offers often have to move in a few hours, so it fits.

Walk your buyer through it

Sit down with them, in person or on a call, and go through it line by line:

• "Here's what the house next door sold for in August. It has a bigger lot, so I took some off."

• "This one's the closest match. Same floor plan, but the kitchen wasn't updated."

• "This is the range the comps support. Here's the list price next to it."

You aren't trying to talk them down or up. You're separating two things buyers tend to blur together: what the house is worth, and how much they want it. Both are fair reasons to pay a price. They just need to know which one they're paying for.

Then talk about the market, not just the house

The value range tells you what the comps support. It doesn't tell you how many other buyers want the same house this week. The market-trends section helps with that.

• Absorption shows how quickly homes like this are selling. If they're going in days, your buyer may need to come in at or above the range to have a chance. If they're sitting, there's room to negotiate.

• Price per square foot, actives vs. solds shows how far asking prices have been running ahead of what buyers end up paying.

Put those together and your buyer can make a real decision: "The comps say this, the market says that, and this is how much it's worth to us to win." This is where your value shines.

If they want to go over the range

Sometimes they will, and that's their call. A guide doesn't stop them. It makes sure they do it with their eyes open.

It also matters for the appraisal.

If the house is priced well above the comps

The guide makes it easier to say so without sounding like you're trying to kill the deal. The sales do the talking, not you. Sometimes the right move is an offer under list with the guide's reasoning behind it. Sometimes it's walking away.

Keep it in your file

Save the guide with the transaction. If questions about value come up later, during the appraisal or after closing, you have a record of what the comps showed and what your buyer chose to do.

Build one for your next buyer. The next time a client wants to write on a house, make the guide first and walk them through it before you talk numbers.