If your Goal is to sell your home at the highest possible price in the least market time, then you must price your home right.
The value of a home can be difficult to determine and will not truly be known until the market has spoken WHEN YOUR HOUSE SELLS.
Often sellers confuse the cost, price, and value of their home which results in poor pricing
decisions: |
- The COST is the price you paid to buy or build your home. The cost can include improvements you have made also.
- The PRICE is what you will ask for your home when you place it on the market.
- The VALUE of your home is what the buyer perceives.
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There is no relationship between COST, PRICE, and VALUE. |
At the very start of the selling process you will need to establish the PRICE. Generally, when starting this process, it is wise to have a number of Realtors prepare a Competitive Market Analysis (CMA) which we prefer to call a Fair Market Analysis (FMA). It may even be wise to have an appraiser prepare an appraisal.
When preparing a FMA, Realtors will analyze various homes that are similar to yours that have sold recently (comparables) and will develop a range of value for your home. They may also use standard factors from the Marshal & Swift to determine a replacement value for your home. Depending upon the Realtor's experience, the comparables used and the attention to detail of the Realtors, you may receive a number of suggested listing prices.
At this time the highest price may seem most attractive but may not necessarily be best for you. When considering the suggested listing prices ask the following questions: How Experienced Is The Realtor? What support does each Realtor have for their price and how, if you were the buyer, would you respond to that?
You really need the Realtors to be objective in this process and look at from the perspective of a Buyer what value the house has to them. We would recommend that you get some friends who are good enough friends to be totally honest with you to look at your home as if they were buyers and get their opinion of its value to them.
Quite often sellers want to price their homes too high.
This is natural for a number of reasons: |
- Their emotional involvement in the house
- What they have been told or heard about what other homes have sold
for
- What they have in the home including cost of improvements or updates
- The amount of money they need to get out of the house
- Feeling that their house is unique and will do better in the market than others
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Dangers Of Over-Pricing: If you price your home too high (sometimes known as testing the market) what are the probable results? |
- Your house will sit on the market and become stale (forgotten by Realtors while buyers are snapping up other homes).
- You continue to pay mortgage payments, taxes, and other expenses.
- Your competition, priced right, sells.
- Sales Agents will not show it or only show it as a poor comparable to other listings.
- Potential buyers are discouraged from making offers since the PRICE and the VALUE to them are so different that their offer will be a low ball offer.
- More time on the market, less profit for you, the SELLER, because of expenses during the selling process and because homes that are initially overpriced often sell at less than their true market value.
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Benefits of Pricing Right: |
- Salesperson and Buyer enthusiasm
- Agents show your home to sell not just as a comparable
- Faster Sale
- More money To The SELLER: statistically a house that sells in the first 30 days brings a higher sales price and you are not continuing to make mortgage payments, pay taxes, etc.
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Your second most important decision as a SELLER,
after the selection of a Realtor, is the price you will ask for your home.
PRICE IT RIGHT AND IT WILL SELL! |
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