Basis for Selling a Home: Correct Pricing
The seller sets the price of the home, but ultimately the buyer determines the value. My job is to supply you with facts about what has sold recently and what is for sale now to help you make a decision.
The common pricing objections frequently heard from sellers, really have no relationship to value. Some of the most common ones are: “Another Agent said it was worth more.”, “Our home is nicer than those houses.”, and “People always offer less than asking price.”. Others include “We can always come down on our price.”, “We have to get that much out of our home.”, “My neighbor was able to get his price.”, “Let’s try it at our price for a month or so.”, “The buyers can always make an offer.”, or “We paid more than that for our home.”
Obstacles to proper pricing include incompetent Agents who will accept a listing at any price the seller puts on it. Sometimes neighbors will lead the seller to believe they got more for their home than they did.
Inflationary times can cause prices to go up rapidly because of economic factors. While recessionary times will cause prices to go down because of adverse economic conditions.
Fear of making a mistake in pricing, which could lead to losing a significant portion of their equity. Loss of perspective due to the seller being emotionally involved and not necessarily thinking objectively. . A property is worth a value independent of the motivations or needs of the owner.
Overpricing can cause a myriad of problems in selling a home in a predetermined period of time. It can reduce sales associates activity as well as reduce advertising response from both agents and prospective buyers.
Other missed opportunities of overpricing include losing interested buyers, attracting the wrong prospects, eliminating offers, and even helps sell the competing properties by making them look like a bargain.
When a buyer is enticed to pay too much for a home, overpricing can cause appraisal problems. There must be comparable sales to justify the price. Lenders want to protect their investment in case they have to foreclose.
Overpricing initially extends market time no matter how important the reasons.
Houses sell quickly and usually for the most money when they are priced properly in the beginning.
Things that don’t affect value include your original cost, or the cost to rebuild the home today. Your investment in the improvements does not indicate a market value either; they may improve the marketability but not necessarily the price.
Personal attachment and sentiment make a house a home but they don’t determine value. As difficult as it may be, personal feelings must be separated to arrive at a fair market value.
REALTORS® have buyers waiting, who have seen what is currently on the market and are waiting for something new to be listed. Most activity will take place in the first 3-4 weeks of a listing.
The excitement of a new property on the market will create urgency for both buyers and agents to see it as quickly as possible. In many instances the home will receive its highest and best offers during this time. After that initial period, the only people to look at it will be new buyers in the marketplace. Careful consideration must be given to positioning the home properly in the first few weeks of the marketing.
The purest definition of value is what a willing buyer will pay from a willing seller without any undue forces involved. There are different values for specific purposes such as insurance, taxes, or to determine a sales price.
An appraisal will use two basic approaches to value. The cost approach considers what it will cost to rebuild the home today and depreciate it for its age and condition. However, the more popular approach is market value. This looks at homes similar to the subject that has sold recently.
Knowing that past performance is important to establishing value, supply and demand of the current homes on the market also play a factor. Many homeowners find it helpful to look at the similar homes currently for sale before putting a price on their home.