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There are four reasons a property sells:
- Location
- Price
- Condition
- Realtor
Location:
You have no control over the location of your home, but its location helps determine the value.
Price & Condition:
You control these. The right price can only be determined by a well-researched computerized market evaluation. As a home seller, you should get a market analysis comparing your home to similar properties that have recently sold and are currently on the market.
Your home's condition is vital to a sale. A clean-well-maintained home enjoys a competitive edge over all the other homes on the market. You'll sell faster and get a higher price if you 'stage' your home to enhance its appeal.
Realtor
The Realtor advises you on market condition, pricing, staging recommendations, contracting, financing, title work, appraising and closing activities. Just as you insist on an experienced, well-prepared doctor to treat your family, you want a Realtor with a proven track record who does his or her homework representing you in the sale of your home.
My price is high, but bring me and offer!
Serious buyers look in the price range that has been pre-determined by their down payment and monthly payment ability. Unless your property is priced correctly, the down payment and monthly payment requirements will not be competitive.
A buyer, who is seriously looking, soon becomes very knowledgeable in his range. An unreasonable asking price only discourages him from looking and considering your property.
Buyers purchase by comparison and a property priced above the competition does not 'compare' favorably. Inviting a buyer to make an offer can indicate that a fair price has not been established.
If you plan to adjust your price at the time of a sale, it is better to adjust the price now and attract serious buyers. This often places you in the favorable position of having more than one buyer interested in your property.
It is very difficult to obtain a reasonable offer on an over-priced property. The buyer feels he should be just as unreasonable in his offer as the seller in his asking price.
By contrast, offers are much easier to obtain on a reasonable priced property. You can then choose which offer to accept with no obligation to one that does not meet your requirements.
It is a mistake to believe that you will get more for a property by asking more. You usually get less, because fewer buyers will consider it when it's placed on the market. The right buyers will not see it. And it usually stays on the market so long that it tends to become 'shop worn.'
To obtain proper market exposure, it is an absolute necessity to be competitive in price, terms, and condition, with similar properties that are selling in the area.
If you are a serious seller, price your property at market and attract serious buyers. You will stand a much better chance of getting full-market value and your property will sell much faster.
Never select an agent based on price.
Pricing in rising and falling markets:
- Overpricing in a rising market may be OK.
- Overpricing in a falling market is disastrous.
- Market trend is as important as pricing. Make sure your agent understands market trends.
Four kinds of numbers are used to represent your property:
- Cost - What was paid plus capital improvements?
- Price - What the seller wants
- Value - What a buyer is willing to pay
- Market - Value What a willing buyer and seller will agree upon
Regression and progression:
- Regression - The phenomenon of an expensive house being decreased in value because of the lesser desirable homes around it.
- Progression - The phenomenon of a home selling for more than its worth because of having more expensive property or a more desirable area around it.
- Substitution - The value of an amenity is based upon what it will produce, not what it will cost.
Reasons for overpricing:
- Over-Improvement - seller cannot select, add to their lifestyle, enjoy it and expect the buyer to pay the original cost
- Need - the need for money odes not increase value.
- Buying in a Higher Priced Area
- Original Purchase Price High
- Lack Factual Comps
- Bargaining Room
- Corporate Buy Out
The largest impression and most impact a property makes on the market upon buyers and upon agents are in the first few weeks of the listing. Therefore, it should show the best and be priced the best during those weeks.
Make sure your consultant understands the Philosophy of buying up in a down market.
Benefits to Proper Pricing:
- Faster Sale - This will save carrying costs and surely has value.
- Less inconvenience
- Exposure to More Prospects
- Increased Salesperson Response
- Better Response from Advertising
- Attracts Higher Offers
- Means More Money to Sellers
These pricing strategies were prepared because they may be a roadblock between you and your goals. My job is to identify these potential pitfalls and eliminate them. |
