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THE RIGHT SELLING PRICE AFFECTS YOUR BOTTOM LINE
Buyers begin their search oftentimes by price and location. Sadly, many homes on the market are instantly overlooked because they aren't priced appropriately. It's imperative to price it well from the start or you just might be missing out on potential buyers.
When you’re selling your home, the price you set is a critical factor in the return you’ll receive. In setting a list price for your home, there are several factors to consider, including:
· Market Conditions
· Comparable Sales
· Location
· Condition of your home
· Selling timeframe
The list price should be desirable, yet competitive with other homes on the market. Ideally, a home should be priced to sell within 30-120 days based on current market conditions.
In setting the list price for your home, try to find a balance between too high and too low. Either end of the spectrum will deter buyers. If it’s priced too high buyers will feel they’re overpaying for the home and that you’re not willing to negotiate. Pricing the home too low will send the message that the home needs major repairs or something is wrong with it.
Market Conditions
Is it a Buyer’s Market, Seller’s Market or Balanced Market? Market conditions fluctuate often and can make a big difference in how you price your home.
With a Buyer’s market there tends to be an oversupply of homes available for sale and therefore the overabundance of supply drives home prices downward and home generally take longer to sell. In this type of market, you could price to sell, sit tight until the market turns around or you could offer some creative financing options to buyers. Being creative and flexible is paramount in a Buyer’s Market.
On the other hand, in a Seller’s market, homes typically sell quickly, home values appreciate at a faster pace, and the demand is higher than the supply of homes available. As a result, buyers are generally willing to pay more for the home they want.
Other considerations to keep in mind include how quickly homes are selling in the area, and if you’re in prime selling season (typically spring) or not. An experienced REALTOR can provide these answers and other useful information to help you price your home competitively.
Doing Your Homework - CMA (Comparative Market Analysis)
Regardless of how immaculate, upgraded, or attractive your home is, buyers are still comparing your homes with all the others in the area. You might also look at the average price for square foot for your home compared to others in the area.
Doing a little research will go a long way in setting a good price for your home. Look at what comparable homes have been selling for in recent months, what homes are currently on the market and what homes didn’t sell. Your REALTOR can provide a CMA (Comparative Market Analysis) and offer guidance on setting a good price your home.
Location is Key
Where your home is situated makes a big difference. Some questions to consider when selling are similar to those when you bought the home you’re in….Is it in a desirable community? Are amenities close? Are homes well maintained in the area? Does it back up to a railroad track or shopping plaza? Is it on a busy road? Whatever the answers to these and other similar questions, be sure to take the location of your home into consideration when coming up with a price.
Condition of the Home
A home with problems could bring a low offer or no offer at all. No home is perfect, but if a Buyer sees repairs no matter how minor, they’ll start thinking discount right away.
Buyers will discount the price of your home far more than the actual cost of any repair. So, if your home needs any major or minor repairs, consider fixing them. Your REALTOR can be helpful in advising you on the items that could have the greatest impact and recoup the most dollars.
Timeframe
Decide when you want to move. If you’re looking to sell your home in the average timeframe of 18 weeks then you’re affording enough time for proper marketing, buyer feedback, negotiations, etc. However, if you’re looking to move in a few days, then you’re whole strategy changes, with price being the most important factor. Consider the average time it takes for homes to sell in your area, as well as your personal situation, the time it takes to negotiate offers, get through buyer financing, inspections, and other events in the selling process.
Here Are a Couple Tips That Can Really Cloud Price…
Keep Emotions Out of it – It’s easy to allow personal sentiments to take over, distorting reality and leaving you feeling like the home is worth 10 times more than the market is willing to pay for it. Be sure to use reliable information and current market conditions to make a sound decision in setting a list price.
Focus on Today’s Value, Not What You Paid- No matter how improved, upgraded, immaculate your home may be, buyers will only pay what they feel it’s worth compared to all those other homes on the market they can choose from. Set the ego aside and price your home realistically or it could actually wind up costing you thousands more or no sale at all.
DRAWBACKS OF OVER PRICING
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Reduces Activity
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Loss of Interest by Prospective Buyers and Agents
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Attracts Unqualified Buyers
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Limits a Buyers Financing Potential
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Helps Sell the Competition
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Causes Appraisal Problems
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Increases Carrying Costs
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Lowers Net Proceeds
While there are disadvantages of overpricing, there are also disadvantages to under pricing. Well-kept homes that are properly priced receive faster results and higher returns.
Our team works hard to attain high financial results for our clients. By pricing your home properly, we have the opportunity to expose it to a greater number of potential buyers and create a competitive environment in which to negotiate a successful sale.