Pricing Your Home To Sell Fast
To get top dollar for his Lakeview home, Mr. X played lowball. What exactly does that mean? That means as opposed to listing his home 20 percent ABOVE the market value to “see what happens”, he priced his home for sale below that of comparable homes nearby—and got six offers in four days.
“Our strategy was to list the home UNDER the market value and create a feeding frenzy”. Says Mr. X.
Mr. X bought his home in Lakeview 2006 for $425,000 and listed it for sale at $597,000. He went on to say ”a $605,000 listing price would have been where just about everyone else would list the home at. Many home sellers would list the home at $650,000 with the hope that someone would fall in love with the property and pay that amount. Some sellers are stuck in the mindset that aggressively pricing the property could potentially leave money on the table. Some believe that they can always reduce the price if they are not getting the attention they hope for.” Kathy Marshall, REALTOR with Delery Comarda REALTORS, went on to say “many homes for sale go under contract within the first 30-45 days, the level attention a particular property gets goes down after that”.
Variables in Pricing a Home To Sell.
There are many variables that must be considered in pricing a home. It’s important to remember that if a mortgage exists on a home, the interest being paid every month is money literally flushed down the toilet. For instance, if your home mortgage is $1,500 per month, and $700 of that payment is going toward the principle on the loan, every month you continue to pay that note you are losing $800. So if you wait an extra 4 months to get your home sold, you have spent $3,200 in interest, if you only sell the home for $3,000 more, you have lost money by waiting. Other variables on how aggressively you should price your home include the level of competition in the marketplace, homeowners’ insurance premiums, taxes and the time of year you are attempting to sell your home.
The Process for Pricing a Home To Sell
Selling a home can be emotional. Many homeowners have deep connections with their home and sometimes can skew the pricing accuracy. There is a certain process for properly pricing a home to sell quickly. In many instances, the first step is to get the homes true value.
Getting Your Home’s Value
To get a home’s true value, a REALTOR or Appraiser will find comparable properties (comps) that have recently sold. Once similar homes, which have recently been sold are chosen, the next step is to make “adjustments to the comps”. What that means is to simply reduce or increase the sales price of the comparable property, to bring it as close to in line with the subject property as possible. For instance, if one of the comps have 2 ½ baths and the subject property only has two, you will need to reduce the sales price (on paper of course) of the comparable by the amount of value that the additional half bath would have brought. This is done to each comparable to bring it as close in line with the subject property as possible. An “adjustment” could be made for a property being larger or smaller, older or newer, corner lot, etc.
Market Statistics for Sold Homes
Once you know the value of your home, the next step is to look at the homes that have sold, in your area and price range and get a few critical real estate statistics. One metric you will want to look at is the Days on Market or DOM. Days on Market show the average time it takes for properties to be put under contract. Once you have that number, you next look at the percentage off the sales price that those homes sold at. Lastly, you will want to look at the homes that expired and did not sell. With these three metrics, a good REALTOR can tell you, with a relatively high degree of accuracy, if you price a property at a particular price, how long it will take to sell.
Pricing The Home
Once you have the numbers laying out different prices and how long it should take to sell at each price, you can then make some decisions. Keep in mind, most homes that get sold at or above their listing price, go under contract very quickly. Some would assume that means the home was under-priced, but truth is, that homes for sale get substantially more activity in the first 30 days of being listed for sale. If aggressively priced during that time, they should sell quickly. The best bet is to price the home as aggressively as possible, taking the above metrics into account, at the time the home hits the market for sale.
Don’t Let This Happen To You
Because an aggressively priced home gets a lot of activity upon first hitting the open market, its not uncommon to get offers from potential home buyers almost immediately. This is both a good and bad thing. Many sellers may thing that if they have gotten offers in the first week or two, they will continue to get offers at that rate. That sometimes can have a seller not work the negotiations quite as hard on those initial offers and even potentially lead the seller to believe they have UNDERPRICED the home. Truth is, you may be looking at the best offers you will receive on your home. Do not automatically think that the level of showing activity will stay at the rate it is upon first listing the home for sale. This is where the help of a good real estate agent comes into play. They are not emotionally attached to the home and are well aware of all of these facts. A good agent will keep in mind the numbers initially discussed and keep focused on getting your target dollar amount.
Getting top dollar for your home takes a methodical approach. Listen to your real estate agent, as they want to sell your home just as bad as you do and they are not emotionally attached to the home. Following the above process is not a guarantee that you particular home will sell fast, but is a proven approach for getting top dollar for your home in almost any market.
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