Post written by Kim Cedarstrom, REALTOR®, Roche Realty Group, Inc.
Here it is—part two of our super duper guaranteed program to make sure you sell your home in the shortest time and maximize your return on the sale. (Massive disclaimer!!!! There is no guarantee that you will sell your home in this market for the price you want. What I put forward here is my advice for the best chance for you to accomplish this, but no one can guarantee success). Part one dealt with the prep work. Will you try to sell yourself; or (what I hope happens) when you hire a REALTOR©, what are your options as to commission and contract duration.
You have made the decision to sell your property-or have you? Do you need to sell or are you testing the water to see what you can get? If you are serious and need to sell, it is crucial for you to understand that selling property is just like selling anything else. Once someone decides to buy something there are only four things that will determine what they buy and from whom- Price, Quality, Selection, and Service.
Pricing your property is the most crucial part of this process. The market doesn’t care what you paid for your home or for that share of stock. The value to sell or buy anything is totally controlled by how much someone is willing to pay NOW in this MARKET. The only other variables are quality, selection, and service. The SECRET is to price correctly and to exploit as many of these variables as possible.
The quality of your home for better or worse affects the price. Does your home need a coat of paint? Are the shingles on the roof worn out? Are there comparable houses in your market area in better condition with more features? If your property stands out as the best quality, that’s something the market will reward.
Are there many homes in your market area for sale similar to yours or is your home the only one for sale in a desirable neighborhood? Good schools? Low taxes? The selection can add or reduce the price.
What kind of service can the potential buyer expect in buying your home? Does your Realtor© know the area and can he or she answer questions and offer local knowledge to make the buyer more comfortable?
There are two main ways to price residential real estate – comparable sale or replacement cost. Your Realtor© will offer you a no cost price estimate based on sales and current listing prices of similar properties in your market area called a Comparable Market Analysis (CMA). These estimates are like anything computer generated – only as good as the information entered. A problem recently has been the small number of sales that limits the sample data. Here is where the expertise of the REALTOR© can be very helpful. A good CMA is a great place to start in the quest for a sound price. In this market almost all existing homes are selling for far less than the replacement costs, making them a very good value.
Town assessments can be helpful or deceptive when it comes to setting a price for your home. Assessments may not be current and are all subject to equalization rates. Some towns discount the assessments of older homes regardless of condition. Every town is different in what they value. Assessments can be helpful as bench marks, but not always reliable as selling prices in the current market. Always remember that the market is not static, it is constantly changing.
Don’t confuse ASSESSMENTS with APPRAISALS:
Appraisals are values set for properties by trained and certified professionals. Their process in not unlike a CMA, but is more in depth and, of course, is supposed to be unbiased. Lending institutions will require an appraisal to determine how much they will lend on a property.
Here is what happens if you have improperly priced your home. You have marketed your home done all the work and finally have it under agreement. Then the appraisal comes in under the price it is under agreement for. You now have two choices-lower the price to try to save the deal or, what usually happens with the bad taste now in the buyers mouth, you lose the deal.
Proper pricing does three things; it presents your product in the market competitively, it shows value among its competition, it prevents problems with appraisals.
So, here are the highlights:
Work with your REALTOR© to set a competitive price for your property in the current market.
Don’t sign up with an agent just because they’ll take your listing at the highest price. You will soon be badgered to drop the price to where it should have in the first place, be locked in with that agent for the term of the listing, and your listing will become stale.
Show the quality, selection and service that your listing has. That brings value.