An Agents Nightmare – Overpricing A Home

Pricing a home is essential to not only getting the property sold, but to get it sold quickly and for top dollar. Your home will most likely sell for top dollar when it is fresh on the market – usually within the fist couple weeks. At the beginning of the marketing cycle, you are exposing your home to ALL the buyers on the market. Within 30-days you reduce that number and could only be exposing your home to new buyers just coming in to the market.

When pricing your home, it is important to keep in mind that buyers to tend to “shop around”. They want to view homes and search for the one that not only meets there want and needs, but also for the best deal out there. If your home is priced too high for the current market, it will make the other homeshouse-fire-clipart-9iRBRexie look more appealing – you will be selling your competition.

Price is the most critical item that not only buyers look at, but also real estate agents, when looking at selecting homes to view. Poor location, poor condition, terms, floor plan, etc. can all be cured with pricing.

When it is time to negotiate an offer; if it is priced too high, it is possible that no onw will seriously consider or see the benefit of starting the negotiations. The more accurately priced the property is, the less likely the buyers is to start the negotiations with a “low ball” offer or even feel the need to negotiate.

If you do get an accepted contract, at the sale, your property will need to be appraised (if buyer is financing the purchase). If it appraisers below the contract price, there will be a problem. Such as:

  • Lower the purchase price to appraised value
  • Cancellation of escrow
  • Buyer trying to find the funds to come up with the difference between appraised value and original purchase price

 

Incorrectly Price Your Home – Lose Thousands

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:

  1. Your home will most likely sell for top dollar when its fresh on the market
  2. 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
  3. 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!
  4. 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
  5. 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
  6. 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

Underpricing

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.

How Shasta County Stacks Up In Affordability

Surprising enough, Shasta County is doing pretty well compared to the rest of California, when it comes to home affordability. In Shasta County the median household income is $46,870, the median home price is $231,820, the house price that a median income household can afford is $236,910, which makes a difference of -$5,090 (or -2.1%); this means that homes are affordable within Shasta County – with Shasta County being one of the six areas that can boast this (the others being San Bernardino, Fresno, Kings County, Madera, Merced, & Tulare). Following is a breakdown of how California, Sacramento, Santa Cruz, Los Angeles, and San Francisco are fairing compared to us:

  • California: $60,240 median income, $446,980 median price, $304,490 price that median income household can afford, $142,490 difference (46.8%)
  • Sacramento: $53,880 median income, $282,770 median price, $272,310 price that median income household can afford, $10,460 difference (3.8%)
  • Santa Cruz: $70,960 median income, $672,570 median price, $358,650 price that median income household can afford, $313,918 difference (87.5%)
  • Los Angeles: $54,510 median income, $436,010 median price, $275,530 price t hat median income household can afford, $160,481 difference (58.2%)
  • San Francisco: $75,910 median income, $1,247,570 median price, $383,670 price that median income household can afford, $863,899 difference (225.2%)