07 Jul 2011

Home Sellers Have Options in Setting The Asking Price

Either Price It To Sell It or Price It To Own It!

Yes, home sellers have options in setting the asking price!

It is quite simple! Sellers can either price the home to sell it or price the home to own it!  

A home priced to sell is one that is priced at market value, will attract more buyers, will get the attention of real estate agents who will place the home on the top of their list of homes to show, will obtain more home showing appointments, will have more second comeback showings and will result in contract offers. A home priced correctly will sell in a shorter period of time, with less inconvenience to the owner and at a higher price than those homes priced above the market.

A home priced to own is one where the asking price is considerably above the market, and one where buyers and agents have no urgency to see! Home viewings are very sporadic, there are no comeback and second showings, no contract offers and the for sale sign keeps getting replaced with a new real estate broker sign. It is a home that buyers and agents feel is one where the seller does not want to sell!

Yet, many home sellers believe they have other options in setting the asking price, such as “we won’t give it away”, “we can always start high and then reduce the price if we need to”; “let’s start here so we have room to negotiate”, “we need X in order to buy the other home”, “we’re not in a hurry” etc.

Selling Home_Make the Right Decision When Pricing HomeHome sellers need to understand how home buyers search for a home in order to better understand the importance of setting the asking price for their home.

  • Home buyers search by location, price range and personal needs and wants in a home. They have desired locations they are searching in. They have a desired price range they can purchase in. And they know what they want in the home, such as design, bedrooms, basement, garage and other attributes.
  • Home buyers are using the internet to search for homes.  Buyers generally search using a wide price range, perhaps an even wider price range in this real estate market than in previous others.
    Buyers search in larger geographic areas than home sellers think. Their home search results in a long list of possibilities, sorted in ascending price order and then by street name. Buyers can then either click to view more details or move on to the next home. If the buyer does not click for more details, the first showing of the home is lost and the second showing, which is a personal viewing, never occurs.
  • Buyers view and compare one home to another. When searching for homes, buyers view property locations, obtain property details, view multiple photos of the exterior and interior, view virtual tours or videos and perhaps even see aerial views. They fine tune the search results to decide which homes warrant contacting the real estate agent to obtain more information and or setting the appointment to view the home in person. If a home buyer does not see the value of the home when looking at the asking price, they will not contact the listing agent or their real estate agent and will eliminate the home from a long list of possibilities!
    When viewing homes, buyers compare and analyze each home previewed. They compare asking price, locations, condition, amenities, features, improvements, and then eliminate the homes where the asking price is not in line with what they see.
    Home sellers need to understand the value of setting the most appropriate asking price when selling.

Home sellers need to understand the value of real estate agents in the MLS, how they search for homes and how they select the homes to present to their buyer clients.

  • Home Sellers Need to Understand the Benefit of the MLS. The statistics in the Middlesex County MLS reveal that over 73 % of the residential real estate transactions in Middlesex County are sold by a participating MLS office, not the listing company or listing agent.
  • Serious Home Buyers Contact Real Estate Agents. Home buyers contact a real estate agent when they are serious about purchasing a home. Buyers contact a real estate agent when additional details are desired and to set an appointment to see a home they viewed on the Internet.
    Real estate agents have the benefit of the Multiple Listing System and the details of all homes for sale. They can match a home buyer’s needs and wants, price range and locations with the most appropriate homes available.
    Real estate agents know neighborhood locations, they know market value trends, they have the sold data. Why would a real estate agent want to take their buyer client to a home that they believe is priced too high compared to all the others that are available to view?
    A home must be viewed before it can be sold. The asking price is what attracts buyers and agents to want to see a home, Without home showings, there will not be contract offers!

Home sellers need to know that buyers want to view comparable sales before they make a contract offer and when a contract is accepted, the mortgage application and approval process requires a real estate appraisal.

  • Comparable Sales Data. Home buyers ask to see MLS print outs of recent under contract sales and closed sales when they have interest in a home.  Buyers are cautious. They want to see what other similar homes have sold for. They want to know the sale prices of surrounding homes. They want to know if it makes sense to even make a contract offer and at what price.
    Many home buyers do not even consider making a contract offer when the asking price is completely out of line with the sales data and comparable sales.
  • The Real Estate Appraisal. As part of the mortgage application process, the bank or mortgage company will hire an appraiser who will inspect the home and provide a written real estate appraisal report to the lender. The home appraised is an integral part of the mortgage approval process. When there is an under appraisal, the home is appraised at a price less than the sale price, two things occur. Neither of which is pleasing to the buyer. The first is that the buyer is told they are paying too much for the home. The second, perhaps even  more  transaction threatening in most instances, is that the lender will adjust and lower the amount of the mortgage they will approve which would require the buyer to increase their down payment in order to purchase the home.
    These are two very difficult circumstances to overcome in a real estate sale transaction!

It is very simple for a home seller who wants their home sold! Rely on the market facts, and price the home in accordance with the current real estate market. Home buyers will not pay more for one home than they would need to pay for another one in a similar location with similar features and amenities. That may have happened in 2006, but it is not happening in 2011!

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