In the twenty seven years I have been selling real estate I have learned that the biggest misconception about our industry is home prices. Selling your home is so different because it almost always includes emotion.
Selling your lawn mower on Craig’s list is not emotional. A home is the place you raised your family or where you planted hundreds of tulips or cooked many special dinners.
Putting a value on your home is painful because some things are priceless. An agent knows you have heart in this but they know the buyer will be looking for value of a different kind.
They may not appreciate the growth chart on the garage wall but may love the size of the garage. Your agent will help you navigate the transaction, and will respect the emotional value on your home.
How do you determine the price of a home?
When you decide you are going to sell your home and you consult with a specialist, what will be the criteria they use to help you price your home. Three factors a Realtor uses are;
1.Condition and updating. The more you do to your home the more a buyer will be willing to pay. Buyers pay for the WOW factor in a home. They do not pay for the home improvements that are maintenance items. They fall in love with WOW but they become convinced this is the right home based on the improvements. Examples would be a new heating and air conditioning system or new windows. Word of warning, appraisers may not give credit for updating that you would expect.
It can break your heart to have someone in love with your home and the last piece of the pricing puzzle not fit. Appraisers look at square footage and price of homes sold but do not give value for the same improvements the market will.
- Square footage is the most scientific part of pricing a home. Other homes in your neighborhood sold for $135.00 per square foot, your home should sell for close to $135.00 per square foot.
- Price of homes that sold in the past 6 months that are similar yours. Using a combination of condition and square footage a Realtor will research the homes most like yours that have sold recently. This enables them to arrive at an approximate market value for your home.
Who determines the price of a home ?
If you are selling a car you look up the Blue Book value. This tells you what cars like yours in the same condition are selling for and gives you a number. Real estate has no “Blue Book” because each home is unique. The estimate of value a Realtor uses for real estate is a Comparative Market Analysis (CMA). This is the comparable value of homes that are most like your home.
A Realtor can provide the information to the seller, but the seller chooses the listing price. If the seller ignores the market and prices based on need to get a certain price, they will be setting themselves up for a a great deal of stress and maybe failure.
Sellers understand when they are selling stock that there is a certain value for their Apple stock. You call your stockbroker or go online to determine what Apple is selling for. The broker cannot make that stock’s value change. No matter how much a seller needs when they sell their Apple stock, the value will not change to meet the sellers needs. The same is true for home values. No matter how much a seller needs to accomplish their goals, the market will only be what the market is and will not rise to meet their needs.
Your home’s listing price is yours to determine. Your Realtor gives you their professional opinion.You sign the listing agreement. You sign the sales contract based on what you are willing to take, and the buyer is willing to pay.
Some Realtors price homes low so they can sell them quickly.
As Realtors we pride ourselves on selling the highest priced home in a community. We are thrilled when a seller gets a great price and sells a home quickly.
We cannot ignore study after study that proves a seller who sells their home in the first 30 days gets the highest price with the least amount of hassle. Study after study shows the longer a home stays on the market the lower the offers. A home hits the market and there is excitement. A pool of buyers who are looking for a home of this type, in this area, will want to look immediately.
If the home is priced too high, buyers may not look at the home. Contrary to what some might think, most buyers will not come in with a low offer on an over-priced home. They instead let you know your home is overpriced by not making an offer or not looking at it.
Most buyers feel no sense of urgency. They vote with their feet. They walk away from your home if it is overpriced. The same buyer will also let you know if your price is at or below market value.
If the home is at or near market price, buyers will feel a tremendous sense of urgency to write an offer. I have had the privilege of selling more homes in the Peachtree Corners area than any other Realtor. That means that in some cases I sold the highest priced home in a neighborhood. It also might mean that I sold the lowest priced home in the neighborhood.
Questions about real estate, give me a call at 404-955-7653 or email me at Nancy@Minor.net.