As a Realtor, one of our biggest frustrations is dealing with the unrealistic expectations of a seller. Sellers are notorious for believing their home is worth more than its true value. The market has plenty of properties that will never sell without a price adjustment. Lack of comparable sales, poor or no Realtor representation, believing improvements are worth more than they really are, no knowledge of the real estate market, ignoring current competition, needing a certain sales price based on personal expenses and not staying on top of the current market conditions are a few reasons sellers overprice their
Sarasota homes.
Market value is the dollar amount for which a property should sell for between an able buyer and seller in an arms length transaction after sufficient marketing where both parties acted knowledgeably, prudently and with no compulsion.
What market value is not:
- It is not what you bought the home for plus improvements and Realtor selling commissions.
- It is not what your friend, accountant, family members, relative with a real estate license or anyone else thinks your home is worth unless they are willing to purchase it at that price and you are willing to sell it at that price.
- It is not what you paid for the home plus an expected rate of return.
- It is not necessarily what your neighbors house sold for plus some simply because you like your home better.
Here are 10 tips to pricing your home properly:
1. Be objective – Yes, you are selling your home and all of the great memories and experiences that you have had but try to be as objective as you can. Don’t factor those great memories into the price tag of your home. Buyers are more concerned with location, quality, size and condition. They won’t pay you extra for the great experiences.
2. Forget about what your home used to be worth – Like the stock market, the real estate market changes daily. Homes sell, expire and new competition comes on the market. Real estate prices don’t move as quickly as stock prices but nonetheless the market does change. Concentrate on what your property is worth today and what it will be worth in the next six months. Don’t dwell on what it used to be worth.
3. Don’t plan on finding a sucker – Many people hope that their Realtor can find that one sucker who is willing to pay more for their home than it is really worth. Does it happen? It sure does. Does it happen often enough for you to rely on? No.
4. Where are prices going? – If prices are dropping in your area then you need to sell quickly. If your home lingers on the market for months or years in a declining market then you won’t put as much money in your pocket. I once has a seller who listed their home for $1,200,000. Not too long after we listed it we received an offer for $1,000,000. This was a good offer. The seller was offended and did not take it. Roughly a year later the seller received another offer for $825,000 and took it.
5. Analyze the market thoroughly – This is where a good Realtor can come in handy. I’ve worked along side some agents who put about five minutes worth of work into arriving at an asking price. In some cases that may work but most of the time it doesn’t. Look at the properties currently on the market, under contract, recently sold and expired. Many people forget to look at the expired listings. These are good to analyze to see what went wrong so you don’t make the same mistakes. How does your home compare with the recently sold properties? Again, make sure you are being objective.
6. More advertising does not justify overpricing – Good marketing is important. However, many believe that listing their home with a broker that advertises heavily means they can overprice their home. That does not work either. Buyers typically look at more than one home when making a purchase. Advertising may get a buyer in your home but they will still compare it with the competition. Your brokers extensive advertising campaign may just end up selling your competitors home.
7. Keep appraisals in mind – You don’t want to go through the hassle of an offer, negotiations, inspections and packing your belongings only to find out that your home did not appraise for the sales price and the deal is off. In a perfect world you can find three recently sold similar homes. Do your homework and establish an asking price based off of these three sales. Lending and appraisal guidelines have changed dramatically. Lenders are looking at appraisals closely so don’t figure on selling your home for a price that an appraiser cannot justify.
8. Get in front of the market – when prices are falling many sellers make the mistake of chasing the market lower. They establish their asking price at say $500,000 when it is really worth $400,000. After a year their home has dropped to $350,000 so the seller drops their price to $400,000. This is an example of chasing the market lower. Had the seller priced their home properly from day one they would have put more money in their pocket.
9. Be the best value – Home selling is not brain surgery. People buy the best deal. Examine your competition and be the best deal. It is almost that simple.
10. Lower your price – You need to be flexible. Since the market changes daily you may need to change with it. Be the best deal out there and wait patiently. If a better deal comes on the market then you may have to lower your price to stay competitive.
Buyers are still driving the
Sarasota real estate market. The pendulum does seem to be shifting where buyers don’t have as much leverage as before. Sellers should keep these ten tips in mind when it is time to sell. Remember, the market determines the value of your home. You just get to decide if that price is enough for you to sell.
Labels: sarasota homes for sale, sarasota real estate
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