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House Talk |
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Who Determines the Price For Your Home?
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Many homeowners do not have a full understanding of how the asking price of a home should be established. They either base their decision on what they need to get out of the sale in order to buy another home, or they base it on what they paid and adjust for inflation. Another mistaken concept that prevails is that the real estate agent sets the asking price. The truth is that buyers are the ones who establish what your home is worth in today’s |
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market.
When an agent comes to your home and shows you a competitive market analysis, it is made up of homes that have recently sold, homes currently listed, and homes that were listed but did not sell. What these numbers represent are what the buyers were willing to pay for a home similar to yours (the solds), and what the buyers were not willing to pay (the expired listings). It also gives you a gage as to what your competition is (the currently listed).
It is important to take these numbers into account when establishing the price for your home. If you price your home over what the buyers have recently been willing to pay, then your home will most likely not sell.
One of the biggest mistakes a homeowner can make is thinking that they will start with a high price and then come down on the price later.
The reason this is a mistake, is that the first 2 weeks that a home is listed is the hottest time on the market. Buyers who have been looking for a home for awhile are always excited to see a new home listed for sale. However, most buyers are smart enough to have shopped around and know what houses are selling for in your area. If your house enters the market priced higher than all the rest, the buyers won’t even bother looking at it.
Later, when you decide to lower your price to what other homes are selling for in your area, it will be too late. |
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You will have missed the initial wave of buyers that a new listing creates. If buyers do look at your home later, they may wonder if you lowered the price because something is wrong with the house. They may be more careful when inspecting the house, which may bring up more problems to fix.
Time on the market always works against you. When all is said and done, you may end up having to come down on the price even farther than your neighbors, just to get it sold. |
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The smartest way to price your home is to be very competitive in the beginning. Sometimes you’ll get so much interest in that first wave of buyers, you’ll end up with two or more offers at the same time. If several buyers are interested in the same property, it can drive the price up higher.
Finally, keep in mind that real estate agents should always advise you to price your home at fair market value. You should hire an agent based on their qualifications and not on how high they are willing to list your house. Remember that in the end it comes down to what the buyer is willing to pay and not what the agent is willing to list it for. |