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The seller sets the price of the home, but ultimately the buyer determines the value. A market analysis will supply you with facts about what has sold recently and what is for sale now to help you make a decision. Common pricing objections frequently heard from sellers really have no relationship to value. Some of the most common ones are: "Another Agent said it was worth more.", "Our home is nicer than the other houses.", and "People always offer less than asking price.". Others include "We can always come down on our price.", "We have to get that much out of our home.", "My neighbor was able to get his price.", "Let's try it at our price for a month or so.", "The buyers can always make an offer.", or "We paid more than that for our home." A property is worth its value independent of the motivations or needs of the owner.
Overpricing can cause a myriad of problems in selling a home. It can reduce marketing activity, as well as reduce advertising response from both agents and prospective buyers. Other consequences of overpricing include not attracting the qualified buyers, losing interested buyers, attracting the wrong prospects, eliminating offers, and even helps sell the competing properties by making them look like a bargain.
When a buyer is enticed to pay too much for a home, overpricing can cause appraisal problems. A home must appraise for at least the value of the loan or the buyer will not be able to get the loan. Lenders want to protect their investment in case they have to foreclose.
Overpricing initially extends market time, no matter how important the reasons. Houses sell quickly and usually for the most money when they are priced properly in the beginning. Things that do not affect value include your original cost, or the cost to re-build the home today. Your investment in improvements does not indicate the market value either. They may improve the salability of the home, but not necessarily the price. Personal attachment and sentiment make a house a home, but they do not determine value. As difficult as it may be, personal feelings must be separated from the pricing decision to arrive at a fair market value.
REALTORS® have qualified buyers, who have seen what is currently on the market and who are constantly reviewing the latest listings. Most activity will take place in the first 3-4 weeks of a listing. The excitement of a new property on the market will create a sense of urgency for both buyers and agents to see it as quickly as possible. In many instances, the home will receive its highest and best offers during this time. After that initial period, the only people to look at it will be new buyers in the marketplace. Careful consideration must be given to positioning the home properly in the first few weeks of the marketing.
The purest definition of value is what a willing buyer will pay a willing seller without any undue forces involved. There are different values for specific purposes such as insurance, taxes, or to determine a sales price.
An appraisal can use two basic approaches to value. The cost approach considers what it will cost to rebuild the home today and depreciate it for its age and condition. However, the more popular approach is market value. This compares recently sold homes, which are comparable to the subject property. Knowing that past performance is important to establishing value, supply and demand of the current homes on the market also play a factor. Many homeowners find it helpful to look at the similar homes currently for sale before putting a price on their home.
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