|
|
|
Pricing Your Home Properly is Key to Selling in a Buyer's Market - 2007-08-11 |
As a seller in today's real estate market, you have no doubt been handed a dose of harsh reality. Prices are softer than they were just a year ago, and there are fewer prospective buyers than in recent years.
And if your home is not priced properly, it can sit on the market for months on end. So how can you have the confidence of knowing you are asking an appropriate price for your home?
Here are some ideas to help you avoid over- (or under-) pricing your home:
* It's only natural to talk to several real estate agents when you begin thinking about selling. One of the professional techniques that agents use in marketing themselves is to offer a "free market analysis" of your home.
This market analysis typically lists out the age and style of your home and compares it to homes similar to yours which are both on the market now and have sold in the past. This analysis often goes into details such as bedroom and bath count, and sometimes even square footage.
At the conclusion of the form, the agent renders a "price opinion," providing you with a recommended range for pricing your home. Remember that this is not an appraisal, which is a much more in-depth analysis of your home performed by a state-licensed appraiser.
One trap that many sellers fall into is listing their home with the agent who comes up with the highest recommended listing price. The truth is that some agents are consistently over-optimistic in their price opinions. They believe that it's smart to list high, and that a seller can always lower their price later.
While I believe it is smart to know what has sold recently in your neighborhood, I think it is a mistake to put too much emphasis on agent recommendations. And listing with the agent who comes up with the highest recommended listing price is usually a mistake. Instead, I think it makes more sense to select an agent based on their marketing plan, and leave the pricing to a licensed appraiser.
* Another mistake sellers often make is to price their home based on what they need to get out of it.
The problem with that line of reasoning is this: there is no relationship between how much you need in the future and the fair market value of your home today. And I can assure you that your prospective buyer will be unimpressed with your future financial needs as well.
Again, all the more reason to rely on an appraiser.
* Recognize that, as a seller, time is working against you. There are significant costs to owning your house, and these costs mount up each day that your home does not sell. Remember that you are not only having to pay debt service and taxes, but insurance and utility costs also.
Once you add up all these monthly expenses and determine what it has cost you to sit on the market for several months, you can see how you would have been better off to start with a lower price in the beginning.
* Another mistake often made by sellers is to avoid the headache of getting their home ready to sell. Their idea is that a buyer will probably want to pick their own paint colors and their own carpeting, so they simply offer an allowance for redecorating.
Unfortunately, that strategy backfires when they attract lowball offers from the few buyers willing to take on a project. In a buyer's market, it is easier for the buyer to just keep looking for a house in good condition. The bottom line is that you will likely end up selling for less, and still have to pay for the decorating allowance.
* Perhaps the worst strategy for pricing your home in a slow market is to start high, then plan on coming down later if it doesn't sell.
The first problem with that plan is the timing. Agents and buyers are most interested in your home just after it has appeared on the market. As time goes by, agents lose enthusiasm for listings, even if the asking price is adjusted later.
The second problem with starting high is that you might very well exclude prospective buyers who would have been willing to offer an acceptable price, but were scared off by the inflated asking price.
Instead, I believe in having your home appraised by a licensed appraiser. Yes, I think it's smart for you to have a full knowledge of comparable sales in your neighborhood and yes, you are welcome to share your opinions with the appraiser and anyone else you wish.
But in the end, the only opinion that really matters in a real estate transaction is that of the licensed appraiser. No other piece of paper carries as much weight with buyers (and lenders) as the appraisal, and the sooner you can hand out an appraisal to prospective buyers, the sooner your home will bring offers.
Never forget that the buyer's greatest fear is paying too much. By listing your home at appraised value, you have defused that fear, and taken a step toward a successful sale.
|
|
Upcoming Events
BUYING FORECLOSURES IN GEORGIA
NEW for 2008: Bank-Owned Home Bonanza
This seminar has been updated and revised for 2008 to reflect the dramatic changes in the Georgia foreclosure marketplace. We are literally facing a flood of foreclosure properties, and there is profit to be made in each and every one of these homes.
Whether you want to build a portfolio of homes for your retirement or you simply want to find a better home for yourself and your family, this program is for YOU.
LAST CHANCE THIS MONTH!!
• Saturday, Oct. 11th, 2:00 P.M. until 5:00 P.M. - Renaissance Waverly Hotel in the Cobb Galleria
This COMPLETELY NEW SEMINAR examines the roots of today's foreclosure meltdown and explains how you can take advantage of this opportunity in your spare time.
Advance Tickets: $69; bring a friend for an additional $30.
Couples share materials.
Detailed information available under the “Seminars” button
This course approved for 3 hours of Continuing Education credit by the Georgia Real Estate Commission.
The Real Estate Investor's Institute will be held at Emory University on
November 22, 23 & 24, 2008. Make plans to attend.
Detailed information is
available under "Seminars."
This course is approved by the Georgia Real Estate Commission for 12
hours of Continuing Education Credit. Agents must bring license number.
|
Written Resources