Pricing Your Home Too High. Why it Can be "Deadly" to the Selling Process of Your Home.
"I Want to List it High Because I Know Someone Will Offer Less"
When a seller interviews a real estate agent it's easy for them to get caught up in the excitement of choosing a sales price. If they can get more money for the home, it means more financial opportunities for the homeowner. Maybe it means they can afford to buy a larger, more expensive home, pay off some bills or take a vacation. Unfortunately, uninformed sellers often choose the listing agent who tells them they will list it at the highest list price. This is, by far, the worst mistake a seller can make.
Establishing Value
The reality is that it doesn't matter how much money you think your home is worth. The only person whose opinion really matters is the buyer who is going to make offer, and of course, the appraiser. Pricing a house is part science and part art. It involves comparing similar houses in similar communities, making the necessary adjustments for the differences between them, charting market movements and measuring the amount of housing inventory, all of this in an attempt to help determine a range of value. This is the same method appraisers use to evaluates a house. No two appraisals are exactly the same; they are however, generally close to one another. There is no hard and fast way to just stick a price on your home. If your Realtor doesn't present you with a thought out, well prepared CMA (Comparable Market Analysis) I would consider using someone else. It is a must have. If you feel that what you think you can get for your home is dramatically different from what your Realtor thinks, a good Realtor would suggest getting an independent third opinion from an established area Appraiser.
Is the Price Too Low?
Houses sell at a price a buyer is willing to pay and a seller is willing to take. If a house is priced too low the seller should expect to receive multiple offers and drive up the price up to the market value. There is not much danger in pricing a home under its actual value and your competition. The danger is in pricing it too high and haveing the house sit on the market for months.
How It Starts To Go Wrong
The seller of a home didn't interview her real estate agents. She pick the first agent off the Internet, or a friend, or someone else because, "He looked like a nice guy." The agent priced her house at $250k. After 90 days of sitting on the market, the listing expired.
It Continues To Go Wrong
The next agent she hired listed the house at $235k. Months passed and eventually she dropped the price to just under $220k, still no offers. A few people looked at the house, but no serious buyers came forward.
More Than a Year Later
By the time she hired the last agent list her house, the seller had grown exhausted and weary. It was now more than 12 months later. The seller and her agent then priced the home at $195k and it sold very quickly. The sad part is that the comparable sales in the neighborhood fully justified a price of $220k, but the home had been on the market for too long at the wrong price, and now the market had slowed.
Protect Yourself
The question is how much money an expired listings can cost a seller. The financial losses often exceed the extra mortgage payments and goes way beyond the cost of trying to keep you home spotless during the listing period. It affects the value that a buyer ultimately chooses to pay because it is no longer a "fresh" listing. It's now stale, dated, a home that was overpriced for too long. Don't let this happen to you. Don't be that seller of an expired listing. Be sure to hire a professional Realtor who will help you price your home correctly from the beginning. Your Realtor should have access to powerful tools that can help you determine the best list price for you house.
If you are thinking about buyer or selling a home in the Central Florida area or beyond, do not hesitate to get in touch with me and I will give you my expert opinion on your situation--- with no commitment and free of charge.
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sellers
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I was at a listing presentation last week in Winter Park and was asked to explain the difference between the two to my seller. He said it was helpful to him, so I wanted to pass it on to you....
The appraised value of a property is a professional estimate of a property’s market value. It’s based on the recent sales of similar properties, square footage, location, construction quality, and more. An appraisal varies in cost depending on the price and size of the home. Most lenders require appraisals as part of the loan application process.
But don’t confuse the appraisal with market value. The appraised value is a certified appraiser’s opinion of the worth of a home at a given point in time. And it should give you a pretty good idea what your home will sell for. Ultimately, though, your home’s market value is the price a buyer is willing to pay for it. Having your home professionally appraised before putting it on the market is one way to help you and your Realtor determine a fair asking price. There are other methods of determining the value of your home, including a comparative market analysis (CMA) which I can put together for no cost. A CMA compiles information and sales prices from homes similar to yours from your neighborhood that have sold recently. If you are considering putting your home on the market, or if you are interested in knowing what the value is to make a determination of what your next step might be...drop me a line and I can help you. No cost, no obligation.
Whether it be a CMA, an appraisal, or both, we will be able to price your home according to objective measures rather than a gut feeling or a number plucked from the air.
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Articles by Michael Gonick,
CMA,
listings,
market value
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I just don't think it is fair.
San Jose PLUS Palo Alto PLUS Santa Clara = Number 24.
And Chicago got to add Evanston to take it to #4.
Surely if we were allowed to add Daytona Beach to Orlando we would be able to jump up a notch or two. I hear they have some great high school football in Daytona.
Here is the top 50 courtesy of The Sporting News.
1. Pittsburgh
2. Philadelphia
3. Boston
4. Chicago + Evanston
5. Los Angeles
6. New York
7. Phoenix + Tempe
8. Miami
9. Dallas-Fort Worth
10. Detroit + Ann Arbor + Ypsilanti
11. Houston
12. Nashville
13. Atlanta
14. Washington
15. Tampa-St. Petersburg
16. Minneapolis-St. Paul
17. Raleigh + Durham + Chapel Hill, N.C.
18. Denver + Boulder
19. Salt Lake City + Provo
20. Indianapolis
21. Anaheim
22. Cleveland
23. Charlotte
24. San Jose + Palo Alto + Santa Clara
25. New Orleans
26. Milwaukee
27. Orlando
28. Baltimore
29. Cincinnati
30. St. Louis
31. San Diego
32. Portland
33. Oakland + Berkeley
34. Columbus
35. San Antonio
36. Toronto
37. Oklahoma City + Norman
38. Austin, Texas
39. Vancouver
40. Buffalo
41. Gainesville, Fla.
42. Calgary
43. Storrs, Conn.
44. East Lansing, Mich.
45. Montreal
46. San Francisco
47. Memphis
48. State College, Pa.
49. Kansas City
50. Jacksonville
House hunting? Be prepared with a pre-approved mortgage loan.
Many home buyers miss out on one of the most important steps in the home buying process. No matter what type of real estate market, a good Realtor will tell you that it is a good idea to be pre-approved for a mortgage loan before the house hunting begins.
A pre-approved mortgage loan is a lender's actual commitment to lend to the home buyer, with specifications on the exact loan amount. To become pre-approved, consumers must provide personal financial information, such as income, debts and assets, to an underwriter. After a home buyer applies for the loan, the lender will most likely approve the application with certain caveats. As the lender is committing to the loan amount and interest rate up front, the buyer knows they have their financing in place before begin shopping for a home. Advantages of having a pre-approved mortgage loan include:
Establishing an advantage in a competitive market. A pre-approval letter gives you an edge in a multi-offer situation. Sellers prefer working with potential buyers who are pre-approved; they do not want a deal to fall through because the purchaser cannot get sufficient financing. An offer with a mortgage pre-approval letter carries far more weight than an offer with only a pre-qualification letter or no letter at all. In fact, sellers often accept offers of lower dollar amounts from pre-approved buyers over buyers who have not been, despite higher offers. With pre-approval, the home sellers are more confident the deal will go smoothly.
Finding the best possible type of loan. Working with a mortgage agent before looking at houses would give you plenty of time to decide what category of mortgage product works best for your financial goals. Once you decide on the kind of loan you want and you are pre-approved for it, you then focus with your Realtor (pick me!) on finding your dream home.
Establishing the price range. Getting pre-approved for a mortgage enables you to determine, prior to house hunting, how much money you qualify for, thereby establishing a price range. You and your Realtor can then focus on looking at appropriate homes.
Seeking comfort with the loan amount. By taking the time to seek pre-approval, you select a comfortable loan amount. In many cases, buyers may qualify for mortgages that are more expensive than what they feel comfortable committing to for the long-term, merely because it works on paper. It is important for you to purchase a home you can afford.
I have a number of lenders that I have worked with successfully that I can put you in contact with if need be. Do not hesitate to get in touch with me about this...or anything else.
Happy New Year!
