Incorrectly pricing your home can be very detrimental to, not only getting your home should, but also getting top dollar for your property. Following are six items to take into consideration when pricing your home:
- Your home will most likely sell for top dollar when its fresh on the market
- Buyers buy after they shop around. Buyers are in search of the best buy (a great deal). If your homes is priced too high, it will make the other homes look more attractive – you will be selling the competition
- At the sale, your property will need to be appraised. If it appraises below the contract price, you will have a problem. Many sellers then drop their price too much to get it closed!
- Price is the most critical item that both buyers and real estate agents look at when selecting homes to view. Poor location can be corrected with price, so can bad condition, terms, floor plans, and decorating
- Negotiations: If it is priced too high, it’s possible that no one will seriously consider or see the benefit of starting the negotiations. The more accurately priced the property is, the less likely the buyer is to start the negotiations with a “low ball” offer or even see the need to negotiate. Buyers will be more unreasonable than the sellers are going to be
- At the beginning of the marketing cycle, you are exposing it to all the buyers on the market. Within thirty days, you will only be exposing it to new buyers coming on the market
There have been so many times I have heard of an agent going to a listing appointment and loosing out on the listing because another agent came in at a much higher list price than they did. These same listings then sit on the market for 70, 80, 90, over 100 days; have multiple price reductions; and either sell for the list price quoted by the other agents (if not under) or they do not sell at all – which, sadly, tends to be the case a majority of the time.
Properties that sit on the market for extended periods of time, due to overpricing, become stagnant. Buyers will either wonder what is wrong with the property or will play a “waiting game” to see how low the property will go and once it is listing for undervalue, will pounce on it and score a great deal.
It is SO important to price a property correctly (reflecting the type of market in play) because those first initial days on the market set the whole tone for getting a property sold. A listing will generally have more activity the first few days on the market, compared to a listing that has been on the market for more than 30-days.
If an agent does a Comparable Market Analysis (CMA) for you, really look at the comparable properties being used and the type of adjustments made – all which leads to the agent coming up with a “fair market value” for your property. Ask questions and to how that particular agent came up with their value.
Pricing your home accordingly, based upon the current market and other properties, is key successfully getting your property SOLD.
There are many agent’s out there who brag about receiving “multiple offers” on their listings, how the are able to get homes sold for over asking price, and/or they were able to get a home sold within a few days on placing this property on the market.
These facts all sound enticing from a Seller’s standpoint, but there is something that should be questioned (especially if such activity does not fit with the current real estate market) – were these homes underpriced?
If it is a “hopping” market and properties are just flying off the shelf, then such activities (as described above) are to be expected, from ANY AGENT.
If it is a slow market, with low buyer activity and extended list days on the market, then I would really start to question those select agent who are claiming these “attributes”.
Underpricing a home means that the seller looses out on selling their property for its “true” market value and not receiving top dollar for their home – which also means money is lost out for the seller; it is also unethical for agents to “underprice” a home. Agents take a pledge to protect, along with promote, their clients interests; and one of those interests is being honest with the seller.
This is why so many recommend that sellers talk to more than one agent – at least three. Ask that each comes up with a WRITTEN Comparative Market Analysis (CMA) for the property. Look closely at the CMA and the comparable properties being used. To not be afraid to ask questions, such as how the agent came up with the recommend home value and why the agent chose the comparables being used.
The biggest and most important advice that I could give you, is to plain and simply go with your “gut instinct”! What is your “gut” telling you about what is being presented? How comfortable do you feel around that agent? A comfortable, trustworthy relationship is key in having a successful, business partnership because that is what you are establishing – a partnership.