Pricing Your Home – To Sell!
One of the most difficult, and controversial, steps to selling your home is determining the price to list and sell it at. People are often confused about the process of establishing a price of your home. First of all, it is important to remember that the seller determines the listing price of the home, but it is the buyer who ultimately determines the selling price.
The process of determining what to list a property for should be a joint decision between the seller and the listing agent. Above all, it is important to look at the facts that are supporting a particular price. All to often, when giving a listing presentation to Mr. & Mrs. Seller they will point out that the house down the street is listed at $40,000 more than what I am presenting- and that may be true. But it is important to remember that you have to compare apples to apples. The house down the street may be larger, newer, have more upgrades, etc. Not only that, but the house down the street listed for $40,000 more hasn’t sold either, so it is important to keep those things in mind.
Agents use what is called a Comparative Market Analysis to determine a listing price for a home. The CMA is truthfully a combination of science and art. The science involves the use of MLS (Multiple Listing Data) available to real estate agents. The agents identify homes in the geographical area that are similar in size, age, condition etc, that are currently listed and ones that have sold in a relatively recent timeframe. It is important that the agents have a good understanding of the market and use that knowledge to effectively weigh the facts in determining a listing price. For example: It would be misleading to use the listing price of a home down the street if it is overpriced. It is far better to use the recently sold price of homes in determining the listing price of your home. Even then, the sold price of a home needs to be recent, especially in a difficult market such as now.
An agent will normally give a range of what they believe the house should list for and sell for. For example: An agent may give a range of $249,900 to $255,900. I can not emphasize enough how important it is at that point that the seller(s) and agent have a conversation about how those numbers were obtained. Nothing is in stone. The rule of thumb in real estate is that if it isn’t illegal, immoral, or unethical, it is negotiable!
Seller(s) will many times respond that they want to get more for their house, and that is most likely true. It may depend on what they want, but more often, it is based on what they owe on their mortgage. In any event, listing a home higher than the market will tolerate is the kiss of death in real estate.
Listing a house higher than the market just to make more money is a bad, bad, bad idea. Let me just say that everyone probably puts a little wiggle room in the listing price, and that is OK, but if that wiggle room is too much you may as well take it off the market. If you list you home too high the people who can afford your home will not be looking at it, they are looking at homes that they can afford. And the people who can afford a home at the price you listed yours for, are also looking at other homes that are priced correctly and will be comparing your home to those priced correctly, and the over priced home will not get a second glance. To compound the problem, it is not in the sellers interest to have a home on the market for an extended period of time. Buyers become nervous that “something is wrong” with the house. This is not as true in today’s market because of the slump, but it still does have some merit. My advice is that if you are going to list your house, list it to sell.
I recently received an email from someone in another part of the country who decided they were going to sell their house and the agents whom they contacted could not come up with a listing price. The seller admitted that there was a lot of work that needed to be done to the house, but he wanted to sell it. He did not indicate what work needed to be done but his words, “a lot” tells me something. Chances are the agents don’t know what needs to be done either.
To that I would say, if you want to sell your house, fix it up as much as possible. Buyers today have too many homes to choose from to buy one that they are going to have to start work on, especially if they are not sure what all needs to be done. If you don’t want to fix it up, then you are going to have to knock that price down low to attract a buyer.
All to often, sellers will have a couple of real estate agents provide them with a listing presentation and the sellers simply select the agent that provides the highest estimate of listing the house. Then six months down the road they are frustrated why their house has not sold. The highest listing price may not be the price that it will sell for. Talk to the agent to determine how they arrived at that price and what is their approach to market the house.
If you are thinking of selling your home, or buying a home, talk to a REALTORÒ in your area. Only real estate agents who are members of the National Association of REALTORSÒ and who subscribe to the NAR’s strict code of ethics can identify themselves as REALTORS®. They have the facts you need on the market conditions in your area.
As always, if I can help you with any of your real estate needs, or to answer any questions you may have, please don’t hesitate to contact me by text or phone call at 615 417-8182 or email me at RolandLow1@gmail.com.