FIVE FACTORS AFFECTING THE SALE OF A HOME….and who controls them
Marketing: Real Estate Agent
Pricing isn’t important. It's everything. There are several advantages of proper pricing when it comes to selling your home.
1) Faster Sales: Properties that are overpriced remain on the market longer and become what is known as “shopworn” or unsalable. Properties that are properly priced create excitement with potential buyers who have been pre-qualified for your property’s price range.
2) Increased Response from other realtors: Realtors follow the market closely and know when new listings become available. They know and understand the price range for their clients, and if your property is overpriced, realtors will not show it. In fact, it may help competing properties that are properly priced sell first.
3) More money to seller: Usually, the first offers are the highest and best offers. The longer a property stays on the market, the lower the final sales price will be. Statistics show that homes are most marketable within the first several weeks of being listed. The longer the property is on the market, the more questions potential buyers have regarding the home.
4) Better response from advertising and sign calls: Properly priced homes will receive better response from both qualified buyers and agents working for prospective buyers. This will result in more showings and ultimately, a shorter time on the market before the property sells.
5) Attracts “cleaner” financing: Properly priced homes will be easier for lenders to finance, resulting in faster, more economical loan closings for prospective buyers. It will eliminate the need for “creative” financing which is more difficult and expensive for buyers.
It is important to understand that the market controls the value of property, and that the realtor has no control over the market, only the marketing plan. The realtor’s role is marketing the property, not pricing it. Owners must make the pricing decision based on market information and factors presented to them by their realtor. One of the best tools for this is the Comparative Market Analysis (CMA).
It is no secret that realtors often have a difficult time working with sellers to arrive at the right price. In fact, many realtors will give in to a seller’s desired or “I want” price, even though this may not be supported by market conditions. Many agents are afraid to tell their sellers that the property is overpriced for fear of losing the listing to another agent. In fact, the single largest reason for overpriced listings is an agent’s inability to get the seller to price the property right the first time.
A good realtor will suggest to the seller that if they can’t afford to sell the property at the suggested market price, they should take it off the market until market conditions change…which they always do.
Common Seller Justification for Over Pricing
“We need the money”…..The seller must understand their true motivation for selling and balance that against their need for money.
“They can always make an offer”….Buyers search for homes by price range. If you over price your house, the people who are qualified to buy your home do not even see your home since it is outside their search price range. Remember, realtors don’t determine what buyers buy, they determine what buyers see. If your property is overpriced, agents will not include it on the home tour list.
“Couldn’t we just try it for a couple of weeks?”…..The worse time to overprice is during the first several weeks, when the majority of market activity occurs. You do not want to overprice during the period of best buyer activity and then lower it later after the potential buyers have gone elsewhere.
“We can always come down”….Once again, the first several weeks of market activity are the most crucial in finding a buyer at the right price. Reducing your price sends mixed signals to the market place, where buyers and agents begin wondering why the property is being reduced.
“We’ve had a higher appraisal”…..Market conditions change over time which may affect the current value of your property.
“We’ve got a lot of money invested in our home”…Value is determined not by what you put into a home, but what a buyer gets out of the home. Remember, buyers determine value based on current market conditions. If you can’t recover your costs, it may not be the right time to market your home. What you originally paid for the house, the cost of improvements, the type of improvements, and the cost to rebuild the house today do not affect current value.