Health & Fitness
Great Real Estate Question of the week...
Pricing your home for a sale - price it right the first time and why! Why is it important to price your home at the right price from the beginning of your selling efforts? If you want to be successful at selling your home you need to price it right.
Why Didn’t Rose’s Home Sell?
I recently worked with a client who, by the time I was embedded into the process, had been attempting to sell her home for many months and had frustrations aplenty. Let’s call her Rose…
The Initial Interviews:
Before placing her home on the market, Rose had interviewed three agents (highly recommended in order to compare each agent’s price recrecommendations and marketing plans). All three had presented Rose with a CMA (Comparative Market Analysis) in which two had recommended a similar price while the third suggested listing $25,000 more than the other two. When Rose questioned the list price, the agent seemed confident and convincing and since this agent was supposed to be an expert (and admittedly, Rose was not), she decided to move forward. She did list her property with the agent who suggested the higher price.
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“Buying the Listing”:
In this situation, the agent essentially “bought” the listing by quoting a list price in which it was highly unlikely the seller would ever see an offer close to this amount. This agent is likely counting on being able to convince the seller to drop the price within a few weeks of listing the home.
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Scenario: You list your home for $275,000 and the value is really $250,000. You are missing the buyer’s in the $250,000 price range as they won’t be looking at the higher price point. Agents are likely showing your home to buyers to compare to the others in the $275,000 range, highlighting the value in the competition versus your home. The market doesn’t lie and the same buyer’s walking through your home have seen ALL the other homes at your price point- they probably don’t even need their agent to point out that your home is overpriced as they can simply see this. This is a very tough, albeit valuable, lesson: If one agent is quoting fair market value as much higher than the other two, they are more than likely attempting to “buy” your listing. By the time you reduce your price to where market value truly is, all of the competing homes will have sold while yours sat and is now considered market worn. In most cases, your ultimate sales price will be lower than if it was priced right from the outset.
Why Do Some Owner’s Overprice?
Many overprice due to heeding their agent’s advice (addressed above). Another reason homes are overpriced is a seller may be using an unreliable method to calculate value: use a past value (i.e.: past refinance appraisal, etc) and try to add appreciation. First, there is no guarantee in any market that a property will see appreciation - this is determined by the strength of the local market as well as supply and demand (there is NO standard). The MARKET dictates what your home is worth (what a buyer will pay for based on competing home sales in the area) regardless of what it was appraised for or purchased for, whether 1 or 10 years ago.
Our homes are an investment, similar to stocks. While we hope they go up in value, there is no guarantee of this. If you had purchased stock 5 years ago at $100/share however now the stock is valued at $50/share, you wouldn’t expect to sell the stock at $100/share plus appreciation. This same logic needs to be applied to our homes, as they are, for many people, our biggest investment.
Condition:
The determining factors in the success of your home sale are pricing AND condition. Rose’s home was in fair condition however needed a good cleaning, de-cluttering and some painting to freshen things up. She had mistakenly assumed that in a more active market, she could avoid doing these things and still ask more than top dollar for her home. Buyer’s have many homes to choose from and are looking for “model condition” if paying at the higher end of market range for a property.
Want to know about the current Home Selling Market in Oakdale Minnesota... Call Larry Eberhard for your Real Estate Questions.
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Want a FREE HOME MARKET ANALYSIS: Call Larry Eberhard with Keller Williams Premier Realty.
651-702-4000
email Larry @: larry@larryeberhard.com
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