Back to 'Sellers' One of the most difficult decisions for a Seller to make when trying to sell his home concerns PRICE. On one hand, he wants his house to be competitive and actually sell, on the other hand, he would really like to make a good profit on his investment. This is another area where the services of a competent real estate agent can help tremendously. There are many elements that go towards pricing your home. All are valid and reasonable, but keep in mind that, ultimately, the final market price of your home is determined by market conditions and based on what a ready and able Buyer is willing to pay for your home.  By law, only an Appraiser can use the term "value" when discussing your home. We, as real estate agents, are not qualified to determine value. We, however, are able to estimate the potential selling price of your home. This is done through an analysis of comparable properties sold during a given period of time referred to as a "Comparative Market Analysis."
This is a standard method by which many homes are priced around the country. However, in the end, you are in control of the asking price. All we can do is advise you on the competition, current trends and what has sold in the past. We can look at your home along side comparable properties, analyze the similarities and differences to come up with something logical and statistically accurate, but in the end, pricing your home is your decision. Therefore, it is important that you understand the most critical aspect of home sales when determining the price of your home: - Price and Timing are everything. The rule of thumb in real estate is that a home has the greatest impact during it's first couple of weeks on the market.
- A home priced reasonably will attract a lot of attention and has a higher probability of selling within that time frame at or close to the asking price.
- An overpriced home, however, will be easily identified as such and will sit on the market and languish.
- More often than not, your Agent will eventually approach you about reducing the price, at which point, you've past the initial "honeymoon" period when your home had the greatest potential of selling for it's highest price.
- Once reduced, a Buyer can see that it's been on the market for awhile and that a price reduction has occurred. In many instances, by now, your negotiating power has been diminished and it will be more difficult to get the highest price possible.
- Wiggle room in the price is not always necessary. Some people assume that Buyers will always make the lowest offer and want to pad the price to be able to give a little on the negotiating table.
- A fairly priced home can often stand on it's own with no haggling involved. You can instruct your Agent to inform prospects that the price is fair and firm and at least give Buyers the head's up. If it's a fair price, most people will know it, appreciate it, and come to the table with an equally fair offer.
- Upgrades or certain features of your home may not be as great as you think they are. As times change, what may once have been a fabulous upgrade or luxury feature in your home may now be a standard item in newer homes. These upgrades simply make your home able to compete with the newer homes in which these features are standard.
- Whirlpool tubs, for instance, are almost always installed in new construction homes for the past several years in most master baths in this area. So what may seem to you like a great upgrade feature in your home, may be expected by your buyers and not necessarily viewed as adding value.
- Same goes for hardwood floors or ceramic tiles. In our area, more and more homes feature these materials as a standard, not an upgrade. As such, if you added hardwood and tiles to your home, while it may still help your home look better and sell quicker, it may not necessarily make your home 'special' to the jaded Buyer.
- Talk to your Agent about the upgrades you may have added and let him/her evaluate their impact on the potential selling price of your home.
Commission, Pricing and Competition... Competition is one of the axioms of a free market economy. In real estate, that means we compete with each other for your business, offering you choices, even within our own office since we are all Independent Contractors. In a perfect world, every homeowner would base their hiring decision on ability, reputation, knowledge, personal comfort level, etc. More often than not, however, the decision is usually made based on a bidding war... the agent who offers the lowest commission or the agent who promises to sell your home at the highest price. Both are bad... here's why: | Regarding Low Commission: Any consumer can tell you that cheapest is not always the best. By that same token, the most expensive is often not always the best. But rest assured, in most cases, you get what you pay for. Every Homeowner will eventually ask at one point or another, "Will you lower your commission?" and follow it up with "Another agent said he'd do it for a full percent less than you." Warning to the wise: Some agents are so eager to take your listing that they will immediately cave and agree to lower their commission. Great, you think? Well, consider this... if an agent is so eager to get your listing and negate the worth of his own expertise and services, what do you suppose he will do with your home and your needs? If he can't effectively negotiate his own price and fight for the value of his own services, how do you suppose he will fight for you and the value of your property? You must ask yourself: Will I be getting the full services and benefits that I deserve to effectively market my home and get it closed? Is the Agent agreeing to cut his fee in a desperate attempt to simply add your property to his listing inventory to attract more potential buyers? Question his motive, methods and integrity. Don't let the desire to save a few bucks cause you to make bad choices in real estate. There's a lot at stake! Think about what this means for you and always make informed decisions. | Regarding High Pricing: Everyone wants to get top dollar for their home and most people think their home is worth much more than other homes in their neighborhood. However, the prevailing market theory regarding the actual market value of a property is based on this: A home is worth what a ready and able Buyer is willing to pay for it and what a Seller is willing to accept. A homeowner wants to sell his home and buy a larger home. Similar homes in his area have sold for $200,000. He, however, needs to net $230,000 on his home in order to finance his next home. Agent after agent says that the best price to list his home is between $200,000 and $220,000. Eventually, he finds an agent who says he can sell it at $250,000 with no problems. Sold! To the highest bidder... But then what happens? That agent places this home on the market and EVERYONE knows it's overpriced. The few agents who bring Buyers to the home advise their clients that it's over priced so the home is viewed less than positively. Let's say someone eventually comes along who likes the house - a lot! But their agent provides them the same comps the other agents used to get a possible list price and based on this information, they come up with their own best and reasonable offer - of $210,000. The Seller is furious with this offer and rejects it right away. But wait! It's his lucky day! Someone comes along who really loves this house! With excellent credit, they decide this home is worth $250,000 and make a full-price offer. When the lender appraises the property, it comes up low (imagine that!) at $215,000. The deal falls apart because they can't get the financing to work... Then, months go by. Interest and showings are slowly waning. The Seller calls his agent and the agent suggests lowering the price... ah ha! Gotcha! |
|
|
