4 Tips For Setting The Asking Price For A Home
If you are planning on selling a home this year, you should know that setting the asking price for a home is the second most important factor in determining whether you will get the most amount of money while selling within the time frame in which you would like to move.
Right now, 44% of the people who put their home on the market over the past year failed to sell their home, and the most likely causes include an incorrect initial asking price and a poor choice in the agent they chose to market the home for sale.
If you follow these 4 tips, you can avoid the loss of money and loss of time experienced by the majority of home sellers today.
2nd Most Important Decision
I mentioned in the opening paragraph that determining the initial asking price for your home is the second most important factor, so you might be wondering "what is the most important factor?"
Since you asked ... :). The most important decision you need to make after you decide to make a move is which real estate company to hire to market your home.
Take the time to interview several agents so that you can fully appreciate the difference between hiring a real estate company versus just a real estate agent. The fees are likely going to be very similar, but the amount of money and support you'll receive throughout the process are incomparable. This is why our motto is "why work with a real estate agent when you can hire an entire real estate company?"
4 Tips For Setting The Asking Price For A Home
I have written numerous articles about the importance of the asking price of a home. It's important to note that these articles go back more than 6 years, so you can be assured that this is topic is critical, regardless of the current market cycle.
If we are in a seller's market, your asking price determines your movement schedule and whether or not you will optimize your proceeds at closing (get the top dollar for your home).
But the same is true in a buyer's market, that's why I wrote "Why Real Estate Is Always A Seller's Market."
The graph on the right shows the trend of home sellers who fail each day who give up and do not return to the market. This DOES NOT include those that fail and re-list right away. So understand that there are people in our market that can tell you that not all homes sell.
Pricing correctly puts the control of the home sale in the seller's hands, and that is truly what I believe most seller's want. We have been told countless times, "we want as much money as we can get and still make the move at a certain time."
There is empirical proof that a home's initial asking price matters and can save a home seller money, so heed these four tips for your success:
- Choose the right real estate agent so that you are confident in her/his analysis - Everything stems from this decision. Try to "help a friend out in the business" and you will very likely leave money behind (IF) you sell your home. You will spend tens of thousands of dollars to sell your home, make sure you hire the real estate company that will bring you more money than you will spend. Do not settle on a agent until you absolutely know they are the best at all the skills and services you will need when selling your home.
- Require a liquidity analysis so that you know the risks/rewards of seeking a higher price (than your apparent market value) - If you understand real estate liquidity, then you can rapidly adjust to current buyer requirements. There is no need for most homes to languish on the market (or fail to sell for that matter).
- Question the agent about reasons why the home might be worth less than what their analysis shows - All listing agents, both good and bad, want you to do well in the sale of your home. The bias in our industry is towards over-pricing, so do yourself a favor and play devils advocate. Find out all known factors that might indicate a lower selling price for your home. Knowing these factors might help you optimize the real estate company's market plan to bring you more buyers. Remember, you should be talking to more than one agent, so what you learn (both positively and negatively) from one could ultimately help you when hiring another.
- Establish a plan for what you will do if you receive fewer showings than expected - If you are tempted to price your home at the very top of its possible selling range, have a plan for how long you will try it. Most people will keep paying a mortgage payment and carrying costs every month (of several thousand dollars) in the hopes of making an extra few percent. Make sure your risk-reward analysis is calculated, monitored, and put on a pre-planned time schedule so you do not leave money behind when you sell.
If you follow the steps outlined above, you are very likely to get your home sold in 4 to 14 days (assuming ample liquidity in your market area and price range).
If you would like to know more about setting the asking price for a home, simply drop me a note and we'll contact you at your convenience to see how we can specifically help you.
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