Are you wondering what your home is worth in the current market?
If you have considered selling your home, chances are that the most important thing to you is the price your home will sell for.
I know you have already been poking around online and looking at automated valuation tools, but how confident are you that the computer is spitting out an accurate analysis of your property?
Properly pricing a home is a critical step to a successful sale. A Realtor can advise as to where that pricing sweet spot is within the current market to make sure you feel confident with your home’s true value.
The temptation will be there to capitalize on a home sale by listing at a price higher than the market data indicates you should… intentionally inflating a property’s value when you launch a listing can be a risky move.
In this post we will look at why inflating the listing price up front may not be the best strategy and how a professional will determine a recommended price range for a property.
What’s the harm in taking a Chance?
For a number of reasons, a Seller may be tempted to gamble with the market and launch their listing with a super high price to see who bites. I caution Sellers to temper that impulse and rely on data if you truly want to maximize your profit.
Why?
Let’s consider an example…
Here’s a hypothetical situation that is a common outcome when a property is overpriced:
A property is listed for sale at $500,000. Similar homes in the neighborhood are all selling around $450,000, but Mr Seller wanted to try to push the price and see if he can pull some buyers up to his dream price.
Buyers who have a budget for $500,000, and have been touring other homes in that range, are going to see this home come up in their search. They see that it is not an equivalent to the other $500,000 homes and are immediately turned off.
After a few weeks, Mr. Seller realizes he needs to drop the price. The problem now is that it has been accumulating Days On Market. Buyers become wary and wonder why it hasn’t flown off the market like some of the others have been. There is nothing wrong with the home, but skeptical buyers will begin presenting low offers.
Unfortunately, Mr Seller ends up selling the house for LESS than market value.
If the home was listed at $450,000 from the beginning, it would have attracted the correct pool of buyers from Day 1 and possibly have brought multiple offers (which is how prices are driven up).
Pricing your home properly within its True Market Value is the best way to maximize your profit!
Don’t forget that Appraisal!
If you receive a cash offer from a buyer that agrees to waive an appraisal, then fantastic! The sky’s the limit with whatever they are willing to pay.
However if you are working with buyers who are getting a mortgage, it is critical that the price is right!
A lender is going to require an appraisal to be done to confirm a property’s value. If the property does not appraise for the contract price, there will need to be some renegotiating in order to hold the deal together.
There are different ways to navigate this situation. Contact me to discuss more!
How DoES a realtor Price a Property?
A Realtor studies the Market Value of a property. MARKET VALUE is the price a consumer is willing to pay for something.
We are also mindful of the likelihood that a property appraises at the list price.
The real estate market is an ever changing world, and is one that a real estate professional is constantly monitoring.
When determining a home’s value, a Realtor has to be hyper focused on a particular location and time in their analysis. A Realtor will review comparable, recently sold homes in the subject neighborhood and make appropriate adjustments to provide their recommended price range.
Here is a brief overview of my pricing process:
I first run an initial Comparative Market Analysis before touring the home. At this point I am taking a broad look at a neighborhood and what the local trends look like. How long are homes sitting on the market? How many active listings are nearby? What are sold prices looking like? What condition are most sold homes in?
Next, I will schedule a time to tour the property with the owner. I will take notes about the property and relevant details I will need when studying comparable homes.
After touring the property, I can now fine tune my CMA by reviewing the recently sold comparable homes. I am looking for properties with similar square footage, similar style, number of bedrooms, number of bathrooms, etc. I also am taking into account the level of updates and any special features a home has to offer.
I look at the sold price per square foot and make adjustments accordingly. Comparing all of this allows me to provide a recommended price range.
I also provide recommendations to prepare a home for sale if a seller intends to aim for the higher end of the range.
If necessary, my clients will utilize Compass Concierge in order to fund any projects that may help bring the higher price.
What about online automated valuation tools?
One BIG difference between a local Realtor’s valuation and an automated online valuation is that a HUMAN Realtor knows a specific market better than a computer!
Realtors are the ones working with and talking with the Buyers. Realtors are the ones seeing and reviewing what kind of offers are coming in. Although sometimes the online calculators can be pretty close, I have seen some that are WAY off.
A professional valuation from a qualified real estate professional is your best guide to properly pricing your home and maximizing your profit!
If you are interested in learning more, or to schedule a no obligation listing consultation, Contact me at emily.woods@veryre.com