Tuesday, March 13, 2012

How NOT to set the listing price of your home.



Do a search on ActiveRain and you’ll find hundreds of blogs in different locations with advice on how to come up with your listing price for your market. I searched how NOT to set the price and found nothing. So here are a few ideas on what NOT to do when you decide to sell your Outer Banks home in today’s market.

•Tax Assessment - Don’t confuse your county tax assessment with market value. Your tax assessment is for the purpose of assessing a tax amount to you for the purpose of revenue to the county. It doesn’t in any way suggest that’s what a buyer is willing to pay or a seller is willing to sell for. Most importantly the assessment on your home right now is 8 years old! On the Outer Banks they only re-assess every 8 years. Because it’s 8 years old, it also doesn’t take into consideration any improvements that have been done since the last assessment.

•Old Appraisal - Appraisals are only good for the day they are written. What? Yes, that’s correct. Considering that anything and everything could change tomorrow, an appraisal can only be valid for one day. If you have a year old appraisal and want to base your price on some reflection of that, you’ll find yourself the highest bidder of your home! Congratulations, you don’t have to move.

•Old Sales in the area – All agents have heard it… “Well my neighbor sold last year for $30,000 more.” Well, sadly, in a declining market that’s what happens. There are so many factors affecting the value of your home today, relying on what sold several months to a year ago will cost you many months of additional mortgage payments on this home!

•Recent Improvements – We’ve also all heard… “Well I have a new roof, HVAC and carpet. I want to ask $extra to cover those costs.” The fact that you’ve done these “maintenance” items is great. It shows you’ve taken care of the home. The problem is all houses need a roof, HVAC and carpet. In a market flooded with inventory asking more for items the buyer expects to be there AND expects in good condition is a losing strategy. What you can ask more for are upgrades. Changing vinyl to tile or carpet to hard wood, or laminate to granite are all upgrades. However, the best way to create value in a market full of homes for sale is to have MORE for LESS. That’s how you stand out above the crowd!

•Basing the price on your needs – We would all love to get the seller the most money possible. That’s part of our job. However, we can only sell the home for the true market value. Just because you NEED to get $50,000 at closing doesn’t mean it’s going to happen. You have to consider all the current factors in your marketplace and if those point to a lower price, you needing that money will not cause a buyer to pay it if the value isn’t there. You may need to adjust your plans based on what’s realistically going to come out of the sale of your home.

•Stuck on 2005 value – It was a good time…a very good time back then. However, all good things must come to an end. Sure, we’ll see prices like that again, but just as that cycle was OVER 15 YEARS in the making, so shall be the next. It’s been 7 years since 2005! It’s time to put those prices to bed. If you don’t need to sell any time soon, great, DON’T. However, if you do need to sell, forget 2005, it’s history. It will be a very long time before prices rise to that level again. Let’s get adjusted to this market and make the best OVERALL decision for your family.

•Focus only on Price – So often I hear, “I don’t have to sell, I’ll just wait if I have to sell at that price.” Selling a home is based on a LOT of decisions, not just the price for it. No one wakes up and turns to their spouse and says “Honey, the house is worth $X, we have to sell it.” Selling is based upon life changes, new needs, maintenance costs, jobs, marriages and so many more things that are related to the way we live our lives. It’s always a shame when I see a seller refuse to sell based solely on the price in today’s market. That means they are putting that dollar value above the benefits selling the home can bring to the family. Don’t let the emotional response to the price create a long term inconvenience for your entire family.

Now that we’ve covered what NOT to do, if you need help pricing your Outer Banks home for a prime spot in our market today, certainly let me know how I can assist you!

1 comment:

  1. Terrific article, especially the part about how much the seller "needs". What they "need" has absolutely nothing to do with what a buyer is willing to pay. I always ask them if they'd be willing to pay more for their next home just because the seller "needs" the higher price and they're always quick to say no! Doesn't take them long to put 2 and 2 together.

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