Establishing a price
The single most important real estate decision you will make will be the listing price of your property.
The benefits of pricing right:
- Your property sells faster because it is exposed to more qualified buyers.
- Your home does not lose its marketability.
- The closer to market value, the higher the offers.
- A well-priced property can generate competing offers.
- Real Estate professionals will be enthusiastic about presenting your property to buyers – this can make all the difference.
Comparative Market Analysis
A comparative market analysis (CMA) is an indicator of what today’s buyers are willing to pay for a home. It compares market activity of homes similar to yours in your neighbourhood.
When conducting a CMA to determine price, the following market activity is considered:
- Properties that have recently sold; these represent what buyers are willing to pay.
- Properties that are currently listed for sale; these represent the price sellers hope to obtain.
- Properties that have been listed, but expired; these are generally overpriced or poorly marketed.
For more information on a comparative market analysis or to have one completed on your home, click here.
Reasons for Overpricing
Improvements should be made for enjoyment, not just for resale. You cannot add an item to a home, select it to your style, use it and then expect a buyer to pay the original cost.
An owner’s need for money does not increase the value of the home.
- Buying in a Higher Priced Area
Values are location specific. High values in the destination, the location to which you are moving, do not increase the value of the home you are selling.
- Original Purchase Price High
Chances are you paid market value for your home. It is not that you paid too much but rather, that the market has since experienced significant change.
- Lack of Factual Data
Base your opinion of value on recent documented sale prices.
- Bargaining Room
Buyers may offer low, but they will do that at ANY price. It is easier to negotiate up to fair market value than to an inflated price.
- Move is not Necessary
Even if the move is not urgent, it is important to price correctly to preserve your marketing opportunities when the move becomes urgent.
The Result of Overpricing
Price High; Lower Later
Many sellers believe that if they price their home high initially, they can lower it later. Often when a home is priced too high, it experiences little activity. When the price does come down, the property has been on the market a while and some buyers will be wary and not consider it an option. On occasion, the price is dropped below the market value because the seller runs out of time. As a result, the property sells for less than it is worth.
Missing the Right Buyer
Many believe that interested buyers can always make an offer, but if the home is overpriced, potential buyers looking in a lower price range will never see it. Those who can afford your home at the asking price will soon realize that they can get a better value elsewhere.
Importance of Early Activity
As soon as a home comes on the market, there is a flurry of activity surrounding it. This is a crucial time when Real Estate Professionals and potential buyers sit up and take notice. If the home is overpriced, it does not take long for interested parties to lose interest. By the time the price drops, a majority of buyers are lost.
Once you have achieved a realistic sales price, with marketing and promotion, the maximum number of buyers will arrive at your door. You can also expect to sell your home for the best possible price in the least amount of time.