By Serj Markarian, Licensed Associate Real Estate Broker
With interest rates declining for the sixth consecutive week—bringing the average 30-year fixed rate down to 6.67%, its lowest since October—mortgage applications have risen by 7%, with weekly demand surging 11%. As homebuying season gains momentum, sellers responding to this increased demand should carefully price their homes to attract buyers and minimize time on the market.
John Walkup, co-founder and partner at UrbanDigs Analytics, recently shared insights on pricing homes from an appraiser’s perspective. While strategic pricing is often described as a blend of art and science, Walkup emphasizes that appraisers operate with a structured methodology to determine fair market value. Their data-backed approach ensures that a home’s price is defensible. Understanding how appraisers assess value can help sellers avoid common pricing pitfalls.
After speaking with a seasoned New York City appraiser, Walkup outlined several key valuation tactics that sellers should keep in mind when pricing their homes to sell at fair market value.
The Appraisal Gap: A Dealbreaker?
A high list price doesn’t guarantee a matching appraisal. If a buyer needs a mortgage and the appraisal comes in low, the bank may require them to cover the difference in cash—potentially derailing the deal. Buyers might renegotiate the price or even walk away, depending on contract terms.
Bracketing: How Appraisers Compare Homes
Appraisers use "bracketing" to determine a home’s value by comparing it to similar properties priced both above and below. Beyond price per square foot, sellers should consider how factors like outdoor space, floor height, and amenities influence valuation.
Overpricing: The Costly Mistake Sellers Keep Making
Overpricing often backfires. Informed buyers avoid stale listings that linger after multiple price cuts. UrbanDigs research shows that homes initially priced too high typically sell for less than those priced correctly from the start.
Timing the Market: Why Seasonality Matters
Seasonality impacts listing success. Manhattan’s slower summer market means fewer buyers and more room for negotiation. A home priced based on peak-season comps may sit longer in July and August—not necessarily due to overpricing, but due to market conditions.
Renovation ROI: What Adds Value (and What Doesn’t)
Renovated apartments command a premium, but not all upgrades increase value. At its peak in 2022, the renovation premium surged to 30%, well above the 10-year average of 14%, before settling at 19%. ROI depends on quality, building type, and buyer demand—every dollar spent doesn’t necessarily translate to a higher sale price. Kitchens and bathrooms typically offer the best return, making it crucial to invest strategically in renovations.
How Much Is Your View Really Worth?
Floor level and views heavily influence pricing, but quantifying their value varies. In Manhattan high-rises, prices may rise $10,000 to $25,000 per floor, though the premium diminishes at higher elevations. Not all views are created equal, so sellers should compare their home to units with similar exposures when pricing.
In my experience, pricing is often a point of contention, as sellers aim to maximize their return or genuinely believe their home is worth more than market value. While there are various pricing strategies to consider, working with an experienced broker can help navigate common pitfalls like overpricing and misevaluation.
