It's a conversation that we have on a regular basis today...how much to list a property for in the current market. Today, the pricing of a house is probably the single largest determining factor on how quickly a home will or will not sell. And, then condition must be considered, along with the property's location. Often times sellers end up with a home that is overpriced for it's current condition.
We hear sellers say that someone will buy it. But, the home must appraise in today's market when the buyer applies for a mortgage. If the house is priced too high, the lender will not loan more money on the property than what it's worth. So, adjustments will have to be made.
Pricing is key when the property first goes on the market.
1) An overpriced house will not sell. The longer it sits on the market, the more stale it becomes. Buyers know how long it's been for sale and they lose interest. If no one else wants it, then they don't want it either, is often the mentality.
2) Some say price it high, buyers will make an offer. They don't and they won't. An overpriced listing is an indication of an unmotivated or unrealistic seller.
3) Sellers say they can always reduce the price on their overpriced listing. Often times by the time they do a price reduction, they are still chasing the market in a declining market. And, they are still too high. Buyers will make a more realistic offer on an attractively priced home, rather than on an overpriced listing. Often overpriced listings get no showings and receive no offers at all.
Factors that affect price:
1) Homes in great locations are likely to sell more quickly than in mediocre locations. Thus, they will fetch a higher price.
2) A well-maintained house sells for more money than a home with deferred maintenance. Often times it's worth putting that fresh coat of paint on the inside and outside of the home before the house goes on the market.
3) Homes that have popular amenities for an area, will help it sell more quickly than one without those extra goodies.
Determining the proper asking price:
1) What have similar homes in your neighborhood sold for in the past 3 months? How do they compare in terms of size, upkeep and amenities? Have a Realtor do a CMA, Comparable Market Analysis.
2) What similar homes are for sale in the area? In a declining market be sure you know what is currently for sale. Those are a large determining factor on where yours should be priced.
3) What similar homes are currently under contract?
It's important for a Realtor to figure out the seller's net proceeds. The seller must know approximately what their sales expenses are going to be, so they are certain they are in a positive position before selling. If not, then they may have to look at other options that better fit their situation.
Sandy Shores Realtor, Melbourne FL Real Estate
Brevard County Real Estate and Investing
I specialize in Residential, Investment and Relocations.
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Hi Sandy:
I am moving to Vero Beach..Houdy Neighbor !!!
Loved your post. I have a thought for you about maintenance & improvements...take my own home on the water here in NJ: Paid in 2004 $526,000 invested in renovation $182,000 (because you can't lose on waterfront homes, right ?) under contract for $485,000...short on 2nd mortgage $125,000....
Yet I am seeing widows walk away with positive cash flow from their homes they haven't touched for 10 years.......
I guess there is such a thing as a happy middle....
Sandy - I believe listings have their "golden period"...the first few weeks when they garner attention. Price too high and it is gone! Great job.
Katherine, It sounds like you are in quite a difficult situation. I hate to hear that. Best wishes to you on your move to Vero Beach. I hope that it brings you everything that you are hoping for.
Gary, I agree completely. The first few weeks of a listing are crucial, and it's so important to be properly priced during that period of time. Because, as you know, as time passes, we lose interest and the listings become stale.
Sandy, I've been telling Seller's for some time now that if the home is priced right, 60% of them will sell within 60 days and that 90% will sell within 90 days. It'll be back to the drawing board after that and an adjustment is due.
Hi Kevin, Good advice -you're right. Overpricing can kill a seller's chances of getting a reasonable offer on the property. When priced properly they are more likely to sell for close to the asking price, than those that are overpriced. After 90 days, often they're dead in the water.
Hi Sandy,
This is a great post, particularly for someone thinking of putting their home on the market. It is straight forward concerning the pitfalls concerning the temptation to overprice a listing. Thanks!!!
In our area the correct pricing gets showings and the condition of the home in relation to the competition determines if the offers will follow or not.
Great reminders, pricing is so very important...
I hope your weekend is full of success Sandy!
Paul
Great info Sandy. Thankfully we both live in a very desirable area. Thanks for sharing this.
-Paul
Sandy, great post. A Realtor can market the property and introduce it to wide audience, but it's still not going to sell if it's priced considerably above market value.
Bruce, It really is all about properly pricing the property, isn't it? An overpriced listing will sit on the market and grow stale. If it ever receives an offer, it will be substantially less than true market value.
Paul, Pricing is so important. Then we consider condition and location.
Paul, We are lucky to live in such a beautiful area, surrounded by water - the Indian and Banana Rivers and the Atlantic Ocean. We really are in a desirable location.
Gabe, So true. We can market the property like crazy, but if the price isn't right -it's just not going to sell.