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Step 3: Set the
Price
Every reasonable owner wants the best possible price and terms
for his or her home. Several factors, including market conditions and interest
rates, will determine how much you can get for your home. The idea is to get
the maximum price and the best terms during the window of time when your home
is being marketed.
In other words, home selling is part science, part marketing,
part negotiation and part art. Unlike math where
2 + 2 always equals 4, in
real estate there is no certain conclusion. All transactions are different,
and because of this, you should do as much as possible to prepare your home
for sale and engage the REALTOR® you feel is best able to sell your home.
What is your home worth?
All homes have a price, and sometimes more than one. There's the price owners
would like to get, the value buyers would like to offer and a point of agreement
which can result in a sale.
In considering home values, several factors are important:
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The value of your home relates to local sale prices. The
same home, located elsewhere, would likely have a different value.
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Sale prices are a product of supply and demand. If you
live in a community with an expanding job base, a growing population and
a limited housing supply, it's likely that prices will rise. Alternatively,
it's important to be realistic. If the local community is losing jobs and
people are moving out, then you'll likely have a buyer's market.
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Owner needs can impact sale values. If owner Smith "must"
sell quickly, he will have less leverage in the marketplace. Buyers may
think that Smith is willing to trade a quick closing for a lower price --
and they may be right. If Smith has no incentive to sell quickly, he may
have more marketplace strength.
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Sale prices are not based on what owners "need." When an
owner says, "I must sell for $300,000 because I need $100,000 in cash to
buy my next home," buyers will quickly ask if $300,000 is a reasonable price
for the property. If similar homes in the same community are selling for
$250,000, the seller will not be successful.
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Sale prices are NOT the whole deal. Which would you rather
have: A sale price of $200,000, or a sale price of $205,000 but where you
agree to make a "seller contribution" of $5,000 to offset the buyer's closing
costs, pay a $2,000 allowance for roof repairs, fund two mortgage points,
re-paint the entire house and leave the washer and dryer?
How much is too much?
Because all transactions are unique there is flexibility in the marketplace.
The amount of flexibility depends on local conditions.
For example, suppose you're selling a townhouse. Suppose also
that there have been five recent sales of the model you own and that sale
values have ranged between $200,000 and $210,000. You now have an idea of
how your home might be priced. In a strong market perhaps you can ask for
$210,000 or a little more. If the market has slowed, $210,000 may be a reasonable
asking price, but perhaps more than the final sale price.
Here's another scenario. Imagine that you live in a community
of Victorian-style homes, most of which were built in the 1920s. All the homes
are different in terms of size, condition, modernization, style and features.
In such a neighborhood, an average sale price is just a statistic without
much practical meaning. On a single block one home may sell for $400,000 while
another is priced at more than $1 million. The average price may be outrageously
high for one home and staggeringly low for another.
Who can help?
Our team of experienced REALTORS® is active in the local marketplace and
can provide assistance with pricing, marketing, negotiation and closing.
Because our REALTORS® have handled many transactions,
they're familiar with the terms and conditions that went into individual sales,
not just published sale prices which may not reflect various premiums, discounts
and adjustments.
Next:
Market It
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