Selling Your Home: The Price Is Right

Many real estate professionals consider price, marketing, and condition the three most important controllable factors affecting the sale of a home, with price being the most important of them all. If you really think about it, pretty much anything will sell if it’s priced right. An old non-classic beat up car would probably not attract many buyers at an asking price of $10,000, but at $500, fixer-upper buyers suddenly appear willing and able to purchase the vehicle. Market value of real estate is determined by what willing buyers will pay within a reasonable time period. How do you determine the market value of your home? The most common method used is the Comparative Market Analysis, also known as a “CMA”. The CMA report will include comparable properties that closely match your property’s characteristics and location, which are currently for sale or have recently sold. The purpose of the analysis is to arrive at an estimated fair market value, or the price at which a home will sell within a reasonable amount of time. Major factors that affect the value of a home include location, competition, market timing, and condition. Most real estate agents will be more than happy to prepare a CMA for you free of charge, and you may want to request an analysis from more than one agent. A professional appraiser can also be employed to determine home value. An appraiser can be particularly helpful where there are no comparables that closely match your property’s characteristics and location.

When two or more agents present a CMA and marketing plan to a prospective client, many home sellers will be tempted to list with the agent who offers to try to sell their home at the highest price. It is important to remember that the market commands the price, and not the agent. The main reason that real estate doesn’t sell is overpricing. It is hard to get real estate sales people excited about showing their buyer-clients a home, when they feel the home is priced above what people are willing to pay. Also, most people now utilize the internet when searching for a property, making today’s home buyers savvy at home-comparison shopping. Therefore, it can be a challenge to get serious and qualified buyers to look at an over-priced listing. What’s more, even if a buyer is found, and is willing to pay above market value, financing can be difficult to obtain. Lenders may be unwilling to finance a home they determine to be priced above fair market value according to their own appraisal.

“What about starting with a high price, as we can always come down?” This may not be such a great idea, because the first couple of weeks are most critical for a newly listed home. The current group of buyers looking for homes will rush out to see properties that are new to the market, and within their price range. The objective is to get the willing and able buyers of this group to view your home. Unfortunately, many qualified prospects will miss your home in this initial phase, because buyers search for homes within their price range and overpricing puts the home out of their sight. Ultimately, activity is reduced to buyers that are new to the market. After a while, a listing acquires a case of “market age”, and buyers might feel something is wrong with the property. Offering a home in the competitive price range from the start can produce the most money, the quickest sale, and the fewest problems. After all…The Price is Right!