Deciding on the PriceFactors that Determine the Value of Your Home:
When Y our Selling Price is too High, Beware!So you’ve decided to sell your home and have a fairly good ideaof what you think it is worth. A couple of the Realtors you’vemet with have come up with prices that are lower than you expected.They back up their recommendations with recent sales data of similarhomes, and yet you remain convinced your house is worth more. When youinterview the third agent’s figures, they are much more in linewith your own anticipated value, or maybe even higher. Suddenly, you are a happy and excited home seller, already counting the money. If you’re like many people, you pick Realtor number three. Thisis an agent who seems willing to listen to your input and work withyou. This is an agent that cares about putting the most money in yourpocket. This is an agent that is willing to start out at your price andif you need to drop the price later, you can do that easily, right? After all, everyone else does it! The truth is that you may have just met an agent engaging in aquestionable sales practice called " buying a listing." He "bought" thelisting by suggesting you might be able to get a higher sales pricethan the other agents recommended. Most likely, he is quite doubtfulthat your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price. Why do agents "buy" listings? There are basically two reasons. Awell-meaning and hard working agent can feel pressure from a homeownerwho has an inflated perception of his home’s value. On the other hand, there are some agents who engage in this sales practice routinely. What Happens Behind the Scenes Whichever the case, if you start out with too high a price on yourhome, you may have just added to your stress level, and selling a homeis stressful enough. There will be a lot of "behind the scenes" action taking place that you don’t know about. Listing agents market and promote your home to the hordes of otherlocal agents who work with home buyers, dramatically increasing yourpersonal sales force. During the first couple of weeks your home shouldbe a flurry of activity with buyer’s agents coming to previewyour home so they can sell it to their clients….If the price is right. If you and your agent have overpriced, fewer agents will preview yourhome. After all, they are Realtors, and it is their job to know localmarket conditions and home values. If your house is dramatically abovemarket, why waste time? Their time is better spent previewing homes that are priced realistically. Dropping Your Price...Too LateLater, when you drop your price, your house is "old news." You willnever be able to recapture that flurry of initial activity you would have had with a realistic price. Your house could take longer to sell. Even if you do successfully sell at an above market price, your buyerwill need a mortgage. The mortgage lender requires an appraisal. Ifcomparable sales for the last six months and current market conditionsdo not support your sales price, the house won’t appraise. Yourdeal falls apart. Of course, you can always attempt to renegotiate theprice, but only if the buyer is willing to listen. Your house could go "back on the market." Once your home has fallen out of escrow or sits on the market awhile,it is harder to get a good offer. Potential buyers will think you mightbe getting desperate, so they will make lower offers. By overpricingyour home in the beginning, you could actually end up settling for a lower price than you would have normally received.
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