Determining the Best Asking Price
A realistic asking price will help to sell your home quickly and
for top dollar. By properly pricing your home you ensure that the gap
between the asking and selling price is small and that there will be
a greater likelihood of competing offers. Your home will also maintain
its 'marketability' for a longer period of time before people start
to say... "That home has been for sale forever. What's wrong with it?"
A house that is priced 10% over its actual market value is many times
less likely to sell in the initial 30 days of marketing than one priced
within 5% of its true value. Not only will an over-priced home take
longer to sell, it is also likely to sell for less than it's actual
value. This is due to the "discount" often associated with properties
that have been on the market for a longer than average time.
It should be pointed out that recommended listing prices are based on
historical sales and current market conditions. It is always difficult
to walk the fine line between getting the most for a property while
at the same time ensuring your asking price is competitive enough to
attract serious offers.
How you feel about testing the market will determine how much higher
than the current selling prices of similar properties you'll wish to
ask for your home. You can always start at a higher price than the market
is currently bearing and then, if necessary, reduce your price at a
future date. The drawback to this is that it could take longer than
normal to sell and you could end up helping to sell other similar homes
as they may look comparably less expensive than yours.
This is where the experience and knowledge of a good REALTOR® is invaluable.
REALTORS® spend a lot of time and energy making sure they know their
local market inside and out. They keep their finger on the pulse of
the market and have the resources, connections and ability to keep you
up-to-date with its constant changes. They know all of the properties
currently for sale in your area and are literally your best resource
for determining and getting the highest price possible.
The Main Factors
That Affect Market Value Are...
- availability of community amenities, such as public transportation,
parks, stores, churches and schools
- quality and consistency of neighborhood planning
- future development plans and local zoning
- style, layout, size, age and quality of construction of the
- size, shape, privacy and landscaping of the yard
Condition of the Home:
- first appearances
- floor layout
- quality and appearance of fixtures
- general overall condition of main systems (such as roof, furnace,
electrical system, central air, etc.)
- the asking and selling prices of comparable neighboring homes
- The best way of establishing an accurate range of value for
your property is to have your REALTOR® prepare a Comparative Market
Analysis (CMA). This will give you a detailed and accurate overview
of the current market.
Market Conditions and the Economy:
- number of homes currently on the market
- number of people looking to buy
- the state of the local and national economy
- current mortgage rates
and the Value of Your Home
No matter the condition or desirability of your home, its value
will be affected by current market conditions. Here are the various
conditions you may encounter and how they will affect you:
The number of homes on the market is equal to the number of buyers (supply
equals demand). In this market, prices are stable and homes sell within
a reasonable period of time. It is a calm atmosphere with buyers having
a satisfactory number of homes from which to choose.
The number of buyers exceeds the number of homes on the market (demand
greater than supply). In this market prices are increasing and homes
sell quickly. As a seller you will probably have more negotiating power
and obtain a higher selling price for your property. Unfortunately you
will be on the other side of the fence when purchasing your next home.
The supply of homes exceeds the number of buyers (supply greater than
demand). In this market prices tend to drop and the homes stay on the
market longer. Thus your home may take longer to sell and you will have
less negotiating power in terms of the selling price. Fortunately you
will be in the driver's seat when making an offer on your next home.
When you understand current market conditions, you are better able to
position yourself as a Seller. It helps to know if you are in a Seller's,
Buyer's or Balanced market when setting your asking price. In a Seller's
market, there is little competition and you may ask for and achieve
a slightly higher price than you anticipated. In a Buyer's market there
is a lot more competition and Buyers have plenty of choices and room
to negotiate, forcing you to be very competitive when setting your price.
In a Balanced market you will have a fair number of showings and sell
in a reasonable amount of time if properly priced.