Setting the Price
The home belongs to you. You set the asking price. We'll explain current market conditions and provide a Market Analysis for guidance, It's important that you set a realistic asking price that will attract buyers to your home. A price that discourages the prospects will only cause your home to linger on the market.
Conditions critical to attracting buyers
The Asking Price
The number one attraction for the Buyer is the asking price. Buyers tend to shop by price and usually don't make offers on homes they can't afford. Setting a realistic asking price that will attract buyers to your home is essential to actually getting it sold.
The second most important factor in the buyer’s mind is location. The proximity to area amenities and schools is typically a concern. In addition, street traffic, proximity to expressways and public transportation are considerations.
Interest rates, competition from other properties, the economy and consumer confidence all influence the sale of your home. Each of these factors is beyond your control, so you must respond to these conditions with appropriate price considerations.
Buyers look at the structural and mechanical integrity as well as the upkeep and cosmetic appeal of a property. Logically, a home in good repair should sell for at least "fair market value". A home in need of too much repair and updating must be priced to reflect its condition. Buyer's will avoid homes that come with built-in expenses.
The terms of a sale can make your property easy or difficult to sell. Giving "occupancy at closing" will attract more buyers than asking for 45 days after closing to move out. Reserving built-in fixtures such as kitchen and laundry appliances or light fixtures add to the buyer's expenses and reduce the appeal of your home.
Factors that DO NOT affect your home’s market value
The following have nothing to do with the market value of your home and should not be used to set the price:
- How much you paid for your home
- The amount of debt on the home.
- How much you paid for improvements on your home.
- The value of a similar home in a different community.
- How much money you need to purchase your next home.
- How much it will cost to build the same house today.
- Your personal attachment to the home.
- Opinions of friends and relatives who are not in touch with the real estate market.
The Problems With Overpricing
Most buyers look at 10-15 homes before making a buying decision. Because of this, setting a competitive price at the outset relative to the competition is an essential component to a successful marketing strategy.
Discouraging the buyers
Pricing your home above market value, hoping to leave a cushion for negotiation, will discourage many prospects and can reduce your traffic to as low as 15% of the potential buyers. Because Real Estate buyers search by price, they won’t waste any time pondering your pricing rationale. They simply ignore any property that’s outside their price range. Statistics have shown that a property priced at fair market value will attract 60% of the buyers who are shopping for a home like yours.
You will lose a percentage of buyers who are outside your price point. These are buyers who are looking in the price range that you are willing to accept but never consider your home because the asking price is above their pre-set budget.
Even if you do find a buyer willing to pay an inflated price, the fact is over 90% of buyers use some kind of financing to pay for thier home purchase. If your home won’t appraise for the purchase price the sale will likely fail.</>
Helping your competition
As Realtors, we appreciate it when a competing home is overpriced. It tends to make our client's listing appear to be a better value making it much easier to sell.
The longer your home sits on the market, the more likely it is to become stigmatized or stale. Have you ever seen a property that seems to be perpetually for sale? Do you ever wonder, “What’s wrong with that house?”
There's no prize for second place!
In the Real Estate market there is no prize for coming in second. Selling your home requires a First Place finish. To finish first, you need to make your home so irresistible that a prospective buyer will choose yours over all the others. You will need to be objective when setting your price and you’ll need to begin looking at your home’s spaces and condition in the same way that a buyer will.