When talking about setting a price to sell your home, we have to talk about setting a “fair” price. One that will make buyers feel that they are indeed getting a good deal, and one that will enable you to move closer toward your goal.
Let us get one piece of housekeeping out of the way:
Home Equity Loans
Many homeowners have tapped into the equity of their homes for one reason or another; to make improvements, to pay off expenses, or to make it through tough times. If you have gone this route you must understand clearly, you have already taken the equity out of your house. You cannot expect to collect twice on that sum. If you have taken out a home equity loan to make home improvements within the past year or two you most likely will not get back the entireamount in your sale price. There are exceptions and an appraiser or real estate agent can advise you based on your particular situation.
Your real estate agent through a CMA (Comparative Market Analysis) will go over with you what properties similar to yours are currently on the market. Those are important. But more important is what sold and what did not sell. Those tell the story of the tolerance of the buying public. After all it is the buying public that will set the final sale price. Pay particular attention and ask the agent to tell you about the history of the sold and expired properties. What was theiroriginal sale price compared to the last sale price and ultimate sold price? What were the total Days On Market? (Sometimes people change Realtors or take their homes off the market to stop the DOM meter from running.) Ask for the true number.
This information will demonstrate to you what buyers looking in your particular area are expecting and willing to pay.
Based on the information you now have, you want to create an atmosphere of excitement about your home. Set an impression that will inspire buyers to come to see it and most importantly make a decision. Buyers who are simply looking are not motivated or they have a sense that this house will be around for awhile. You want to create in essence a frenzy that will lead to multiple interested buyers. Refer back to the numerous articles I have posted about staging and preparing your home.
Many times sellers worry about under pricing their home. The market has your back. If you under price the home you are selling, you can have multiple interested buyers. This will ultimately drive the price up. Have you ever noticed that once a popular product hits the shelf and is immediately sold out, very often the price goes up? Marketing strategists employ this tactic. As a home seller you can tap into this approach. Since you only have one shot at selling your house you need to price it to create that frenzy I mentioned.
Overpricing will lead to longevity on the market and ultimately a lower sale price than if you priced it correctly in the first place. A home that remains on the market will lead buyers to assume that there is something wrong with the house or that you are a difficult seller. Neither of which may be the case. Be prepared for low ball offers.
While the current market is one that presents a scenario of an over abundance of homes for sale and not enough buyers to go around, the outcome can still work in your favor. If you present your “product for sale” as one that is more desirable than the competition and priced at or just below market value, you can create a flurry of activity among interested, serious buyers. And yes you still can have a bidding war for your house. Wouldn’t that be a nice dilemma to have–which offer to accept? I see it happening quite often.
My next blog post will address acceptance of offers. There is much more to consider than merely accepting the highest price and signing on the dotted line.
By Bob Kelly, Guest Writer