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All too often, the asking price of a home is decided upon without good planning. In fact, the greatest mistake made in real estate is poor pricing. The asking price must accomplish three primary goals. Let's examine these all-important goals.
In the final analysis, it is the buyers who determine what your home is worth. How do buyers determine value? Buyers learn about value by inspecting and comparing various homes that are for sale during the same time period. This process of comparison is used when buyers decide which homes they want to see. If your home is not priced in accordance with similar homes, you will not realize as many showings as those homes that are competitively priced. When attempting to price your home with the market, don't rely on hearsay or rumor about recent home selling prices. Get the facts by asking your Realtor for a Competitive Market Analysis(CMA).
Traditionally, in the home selling business, most buyers except to negotiate. everyone like to think they got a "deal". In order to satisfy this need to negotiate, you should price your home so that you will be willing to accept somewhat less than the asking price. Although market conditions will certainly affect the amount of negotiating, most homes sell within 5% of the asking price. A poor market will make this percentage larger while a strong market may experience more full price offers and sometimes offers above the asking price.
Although pricing for the competition and for negotiation are important, the asking price must deliver the highest financial return for the seller in a reasonable period of time with the least inconvenience.
Like most other facets of our lives, properly pricing a home is best done by specialists who have all the necessary tools. Retain the services of a Realtor to sell your home.
The biggest detriment to selling real estate is the all too common problem of overpricing. For the last 20 years, sellers have asked why their property is not selling. The answer is always the same: The asking price is too high.
Why do people make the common mistake of asking too much? There are several reasons. Some owners expect the present home to bring them enough money with which to purchase a more expensive home. In other words, they just are not facing realty. Others price it too high because they have not had their property evaluated by a professional. Relying on hearsay only, they put a price on their property that does not compete with other available properties.
An asking price must satisfy three basic criteria: (1) The asking price must be competitive with the asking price of similar homes. (2) It must allow for some negotiation so the buyer feels that he or she struck a fair agreement. (3) The final negotiated price must give the seller the highest possible return considering the condition of the property and the marketplace.
If your home is overpriced, here is the sequence of events you can expect:
Time an time again, it seems to happen as I have described above. An owner who did not know or ignored the market facts in order to try to get top dollar ends up getting less than fair value.
CLEANLINESS: A personal inspection of every room is a must. Cooperation from all family members is important during the entire time that your home is for sale. Even though your Realtor tries to give you adequate advance notice. It isn't always possible. Consequently, only last-minute clean-up may be possible. The two areas needing closet attention are the kitchen and bathrooms.
LIGHTING: Your home should have a bright and cheery appearance. Lighting plays an important role in displaying your home to its best advantage. Whether it is a sunny day or after dark, turn on many lights throughout the house.
ODORS: While your home is for sale, it may be necessary to temporarily avoid cooking certain foods. Strong smelling foods may be offensive to a prospective buyer. Check the entire house for any musty or distasteful odors.
NOISE: All stereos, television sets, radios, and record players should be turned off while the home is being shown. Many homeowners feel that soft background music enhances the sale. Not so. Any noises may tend to distract the potential buyers from concentrating on the features of your home.
HOMEOWNER: Many homeowners feel that they should personally conduct a tour of their home for both the Realtor and his or her customers. Do not do this! This will make them feel uncomfortable and anxious to escape as soon as they can. Although Realtors don't know all the features of your home as well as you do, they do know the personality and needs of their customers. Excuse yourself and be available for questions. Let the Realtors do the selling.
Everyone who sells a home wants the highest possible price. Sometimes, the only way to get the highest price is to reduce your present asking price. Most homeowners who have placed their homes on the market are hesitant to reduce the asking price prior to receiving an offer. This is understandable. There are, however, certain circumstances that dictate a price reduction and may be necessary to get the house sold. Let's look at some of the important considerations:
Was the original asking price for your home correct ? Who set the original asking price? If you, the owner, set the price, were you realistic in your expectations? If the Realtor set the price, was it based on a careful study of comparable properties? It has been my experience that the homeowner usually plays a major role in setting the price. Once the asking price is set, the owner may become very rigid when asked to consider a price reduction in order to sell your home more competitive with surrounding homes. In order to sell your home at the highest possible price, it may be necessary for you to re-evaluate your asking price from time to time.
If there are not many showings on your home, pricing may be the problem. When buyers are considering which homes to see, they may feel that your does not offer enough features when compared with other homes in your price range. If there are many showings but no offers, price may be the problem. Your home may include the features and location that attract showings, but, upon closer inspection, buyers may feel the price is not justified.
Perhaps the marketplace has changed since your home first became available. Although the original asking price may have been correct at the time of listing, it may no longer be adequate to attract buyers away from competing homes. Real estate values do fluctuate. They respond to changes in the economy, interest rates, local taxing and zoning decisions.
The four vital steps in selling real estate are pricing, marketing, negotiating, and closing. One of the most important phases involves the negotiating process. This step requires good instincts and valuable experience. Some of the items that are usually included in the negotiations are price, type of financing, closing date, occupancy date, amount of deposit, and a recitation of those things that will be included in or excluded from the sale. Because there are some many details that must be agreed upon, there is often some dispute between buyer and seller over some major and/or minor aspects of the agreement.
The ability to remain emotionally objective is essential in order to have a successful negotiation. As a matter of fact, most negotiations that fail do so because one or both parties become angered by the actions of the other. A seller can be offended by the original price being offered by the buyer. A common reaction by an offended seller is to decide that if this buyer wants to buy the house, he or she will have to pay full price. I have also seen sellers make a counter offer that reduces the asking price only one dollar. This is done to strike back at a buyer and let him or her know that the seller is going to be a force to be reckoned with. Buyers also can get hurt feelings when a seller decides to exclude drapes or lighting fixtures that the buyer expected to go with the house.
Whether you are the buyer or the seller, you cannot let your emotions undermine you success when negotiating the purchase or sale of real estate. Here are some simple rules of negotiating to remember:
Because of the need for objectivity in the negotiating process, be sure to enlist the services of a Realtor when buying or selling real estate.
My e-mail address: Lazsold@aol.com
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Massapequa, NY 11758
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