Pricing your home right is crucial for selling…
One of the most important first steps to take when deciding to sell your house is to be sure that you and your Realtor have agreed on an ‘asking price’ that is fair for you, but is also reasonable in terms of fair market value.
With easy internet access available for most people today, buyers have become much more knowledgeable and sophisticated. They have learned to do lots of comparison shopping, and for the most part, know the value of houses where they are interested in buying.
Some of the reasons why it is so important to price your property realistically are:
- Because buyers have more knowledge about values, overpricing will reduce the response Realtors receive to the yard sign and their advertising.
- Your property must compete with similar properties on the market. If your property is the highest priced listing in the neighborhood, buyers will expect more. Failure to find features in your house that set it apart and make it worth more will usually cause buyers to eliminate it as a possibility.
- Overpriced houses tend to stay on the market longer than ones that have been priced realistically. Buyers are very much aware when a house has remained unsold for a while and may not even consider it thinking there must be something wrong.
- The right price is of the utmost importance in the sale of any product. Homes priced right usually sell after a normal market exposure.
- Overpricing tends to force buyers who could purchase in your area to look elsewhere. The first couple of weeks on the market tends to be the period when most potential buyers will be considering looking at your house, especially if they have targeted your neighborhood as a potential place where they would like to live.
- Overpricing can cause a substantial monetary loss if the owner is compelled to own two homes. Some of these double costs are taxes, homeowner’s insurance, maintenance, heat, interest on equity, etc. These expenses are then combined with the many inconveniences the seller encounters.
- Overpricing accomplishes nothing because most homes sell for their fair market value. Fair market value is commonly defined as “the price that probably would be negotiated between a willing seller and willing buyer in a reasonable time. It is usually arrived at by comparable sales in the area.”
- Many times sellers insist on listing their house at a price that is higher than the indicated value with the thought that buyers like to negotiate. While this may be true in some instances, most buyers will not even consider making an offer on an overpriced house because they don’t think the seller will be willing to come down to what they think it’s worth. If you’re willing to lower the price you’re willing to accept, why not go ahead and list it more reasonably to begin with?
- Even if your property is listed higher than the indicated value, and you can find a ready, willing, and able buyer who will pay the price, it will still have to be APPRAISED for that price. Lenders make loans based on the sale price or the appraisal, whichever is lower. A sale price that is too high can cause a contract not to go to closing. When that happens, no one involved in the transaction will achieve their goal.
Sellers quite often will use one of the following reasons for insisting that their property should be listed at a price that is higher than is being recommended by the Realtor:
- “I need ‘X’ amount out of this house in order to be able to do what I want to do elsewhere.”What you think you “have to have” out of a property has very little to do with what a ready, willing, and able buyer may be willing to pay for it.
- “I’ve got ‘X’ amount invested in this house. I’m just not willing to take one penny less than that for it.”One of the biggest mistakes any property owner can make is to “over-improve” a house for the neighborhood where it’s located.
Realtors want to list a property at its indicated fair market value because:
- Good realtors do more than just put a “For Sale” sign in the front yard. There is a lot of work to marketing a house properly. If a house does not sell in a reasonable period of time, the Realtor may feel discouraged and lose enthusiasm for the property. The reason most properties do not sell will be price, condition, or location. It may well be that price is the only contributing factor which can be adjusted. If so, a seller who is truly desirous of encouraging offers on a property should be willing to ask a price that takes the condition and location into consideration. You can be assured that qualified buyers will be looking at condition and location when considering making an offer.
- A Realtor cannot afford to lose the time, money, and energy required to market a property that is overpriced and will be less likely to sell. The advantages of realistic pricing far outweigh any consideration to price a property more than 5-10% above what is deemed to be its fair market value.
ALWAYS REMEMBER: Buyers ultimately determine the fair market value of any property. Buyers shop by comparison, and they are not willing to pay more than a property is worth, but will pay a fair price if it is what they’re looking for.