It is often a mistake to list your home with the agent who suggests the highest
price, as they may be simply trying to "buy" your business. While
it is true that you can always "come down", there are many factors
to consider. Firstly, the market is always looking for new listings. This means
that the first few weeks your home is on the market are crucial and can often
bring more inspections than any other time. Many of the buyers in the price
range will rush to see your home. Those who have been looking for some time
are often the ones who have done their homework and are ready to buy. But they
will also be the most aware of the market value of your property.
Pricing / Hazards of over pricing:
If your home is correctly priced it will make buyers feel they need to snap
it up before someone else does. Then you have the best chance to achieve the
result you wanted and have a result in the shortest possible time.
If the price is too high, (or the property is ‘overpriced’) buyers
feel no sense of urgency. Just as owners take the attitude "we can always
come down", buyers think they will wait until the price drops.
So you need to price your home so that it offers the best value for the money
at whatever price range it may fall into. This then gets the attention of more
buyers and therefore creates more competition for your home and a better result,
sometimes a result beyond the initial asking price. This is a much better method
than pricing your home higher with ambition of getting that dream higher price,
but then placing your property in a price range where other homes at that range
may have more to offer. By doing this you risk over exposing your property,
and by the time you reduce it to market value, active buyers may not consider
it because it has been on the market for a while and gives the impression that
there may be a problem with the property. Then, by the time a sale is achieved
it may have taken a lot more time than necessary and the final selling price
may be lower than what you could have achieved if it was priced correctly from
the start. It is hard to get back that initial interest buyers show homes when
they first hit the market.
For example: A property that ‘could achieve’ $500,000 when first
placed on the market, may only achieve $470-480,000. Because it has become ‘stale’ after
being on the market for a number of months at a price higher than the realistic
market value of $500,000. The longer your property is on the market, the more
buyers feel they have the negotiating power.
Other Hazards of overpricing can range from:
- The lack of enthusiasm from salespeople, making it less likely to be
shown. Smart agents won’t waste time showing overpriced houses.
of time to obtain a sale.
- Bank appraisers not seeing the value in a property
when looking to finance a potential buyer.
- Buyers thinking that it is out
of their price range, therefore not looking at all. Then when the price
is reduced, potential buyers have been lost.
What’s Your Property Worth? / Comparing Your Property:
It is important to remember that a buyer will always want to get the most
value for there dollar. So as the age old saying is true, “Its worth
what somebody will pay”, somebody will only pay money for a home if they
believe it will suit their needs and is priced correctly compared to other
comparable homes in the market place.
As the market changes rapidly year in year out, so does the value of real estate
due to many factors. So usually the price you achieve after a successful sale
is very different from the price you may have paid to buy that property, or
from the estimate you may have got during a market update or appraisal.
So working out how much your property is worth is based on a few things:
- The sale price of comparable properties in the recent past with similar
features, in the neighborhood. A (CMA) – Comparative Market Analysis.
asking price of comparable properties with similar features in the neighborhood,
that are on the market at the time of pricing your property.
- The internal
and external condition of these comparable properties compared to yours.
against the property.
- Pending plans for the surrounding environment. E.g.
Future developments or changes to local areas. (Can increase or decrease
When an agent suggests a selling price, the seller should ask for a list of “comps” (Comparable
homes) to see the evidence the agent is basing his figure on. Remember some
agents will purposely tell you a higher than realistic price to trick you into
giving the listing to them. The price might sound great but flattery will not
get your home sold.
Remember, if your not getting offers after a certain amount of time, the public
is telling you something. The homeowner & agent can set a price, but the
public will tell you what the house is worth.