Betsher & Associates Realtors, Inc.
Setting the Price on Your Home
It’s Time to Sell - You Want
1. The right price
2. At the right terms
3. In the right amount of time.
To Reach These Goals - You Must
1. Make you home look good.
2. Price it at market value right away.
3. Use real estate professionals.
4. The three factors to consider in selling your home. Price, Presentation and Promotion.
Your home's location and setting influences its value. A home inside a quiet subdivision sells for more that the identical home on a busy street. Remote areas typically sell for less than close-in areas. Views, streams and trees usually enhance value. You obviously have no control over location.
New homes enjoy a marketing edge over resale homes because they are shiny and clean. And builders enhance their appeal by offering model homes (clean, bright, decorated in current colors and amenities) for buyers to examine. You should make your home as bright, clean and uncluttered as possible at all times!
Price It Right!!!
Pricing your house at market value from the start will typically result in the best price you will get for the property in the least amount of time and inconvenience to you. If IBM stock is trading between 110 and 120, it does no good to insist on selling at 150. Likewise, your home must be priced within the appropriate range. Listing your property high at first only helps to sell the other houses like yours on the market. Remember, buyers preview a lot of homes so they know what is overpriced. The sales price also has to appraise at market value in order to get a loan on it.
You must actually "sell" your property twice: first to a buyer and then to an appraiser. The buyer is more subjective and compares the amenities of your home to those of other homes in the same price range. The appraiser is more objective and compares age, size, and cost-identifiable features in your home against other properties that have sold. If it doesn’t appraise it very likely won’t settle.
When Your Selling Price is too High, Beware!
Amazingly, a couple of the Realtors have come up with prices that are lower than you expected. Although they back up their recommendations with recent sales data of similar homes, you remain convinced your house is worth more. When you interview another agent’s figures, they are much more in line with your own anticipated value, or maybe even higher. Suddenly, you are a happy and excited home seller, already counting the money.
But which Realtor do you choose?
If you’re like many people, you pick the Realtor whose figures are in line with your’s. This is an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket. This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everyone else does it!
The truth is that you may have just met an agent engaging in a questionable sales practice called "buying a listing." He "bought" the listing by suggesting you might be able to get a higher sales price than the other agents recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price.
Why do agents "buy" listings? There are basically two reasons. A well-meaning and hard working agent can feel pressure from a homeowner who has an inflated perception of his home’s value. On the other hand, there are some agents who engage in this sales practice routinely.
Behind the Scenes
Whichever the case, if you start out with too high a price on your home, you may have just added to your stress level, and selling a home is stressful enough. There will be a lot of "behind the scenes" action taking place that you don’t know about.
Contrary to popular opinion, the listing agent does not usually attempt to sell your home to a homebuyer. That isn’t very efficient. Listing agents market and promote your home to the hordes of other local agents who do work with homebuyers, dramatically increasing your personal sales force. During the first couple of weeks, if the price is right, your home should be a flurry of activity with buyer’s agents coming to preview your home so they can sell it to their clients.
If you and your agent have overpriced, fewer agents will preview your home. After all, they are Realtors, and it is their job to know local market conditions and home values. If your house is dramatically above market, why waste time? Their time is better spent previewing homes that are priced realistically.
Dropping Your Price...Too Late
Later, when you drop your price, your house is "old news." You will never be able to recapture that flurry of initial activity you would have had with a realistic price. Your house could take longer to sell.
Even if you do successfully sell at an above market price, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last six months and current market conditions do not support your sales price, the house won’t appraise. You deal falls apart. Of course, you can always attempt to renegotiate the price, but only if the buyer is willing to listen. Your house could go "back on the market."
Once your home has fallen out of escrow or sits on the market awhile, it is harder to get a good offer. Potential buyers will think you might be getting desperate, so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received.
Realtors Talk to Each Other
Plus, remember those two conscientious agents who got aced out of the listing? If your listing agent routinely engages in "buying" listings, he has probably aced out scores of other agents in the same way. Being human, Realtors talk to each other. If they don’t like your listing agent, not as many of them will be showing your home.
In short, you may have ended up with an agent who was good at selling you, but not good at selling your house. And you’re going to pay them a commission for it.
It is human nature for you to want the highest price for your home. However, when you choose the agent who promises what you want to hear, it often leads to stress and frustration. Most of the time, it will take you longer to sell your home. Possibly, you will end up selling at a lower price instead.
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