How to Set Your Selling Price

Being overpriced is a bad start

If you're selling your house, one of the first steps you'll take is setting an asking price, a maneuver that requires the ability to find the perfect balance between attracting solid offers and ultimately receiving top dollar.

If you're working with a Realtor or other industry professional, you'll probably hear talk of fair market value, which typically means the highest value an educated buyer will pay. Fair market value is usually not the asking price.
 
Many agents will begin by conducting a competitive market analysis of your house and give you an estimate of the fair market value of your home, which is a range that will fluctuate depending on the housing market in your area and how much similar homes in your neighborhood are selling for.
 
If you're in a hot seller's market, like many communities throughout  much of the West, you'll have the advantage.
 
While overpricing to some degree can be beneficial, you'll still want to be careful and avoid pricing your home too high, which almost always is nonproductive.
As you work with your agent and set your price, you'll want to recognize the factors that may prompt you to raise your asking price too much when it isn't warranted. Some of those factors include:
 
  • Upgrades have been added. While many home improvements will help you recoup a good chunk of your investment, it won't give you 100 percent of what you paid. Also, the more personal the improvement—a swimming pool, a sunroom, purple floors—the less likely it will be viewed favorably by potential buyers.
  • The need for money.
  • You're moving to a higher-priced area.
  • The original purchase price was too high.
  • The seller lacks factual comparable sales to prove what the market value is.
  • The seller wants bargaining room (listing more than 1-3 percent above market value actually reduces bargaining power).
  • An unnecessary move, so you're not motivated.
 

On the other hand, if you're in a neutral or buyer's market, like in Minneapolis, you'll really need to be cautious in setting your price.
 
"While a few select neighborhoods are experiencing good activity, the market generally is favoring buyers," said Mary Jo Oren, a Realtor in Minneapolis, Minn. "Price reductions are becoming more common and sellers are having a tough time adjusting to fewer offers, fewer multiple offers and increased market time to sell. Buyers are less emotional and not afraid to offer significantly less than list price plus ask for additional seller participation."
 
Generally, the asking price—the price advertised when it goes on the market—is set slightly higher than market value, usually 1 to 3 percent above market value.
You should assume that negotiation will be necessary to reach an agreement with the buyer. If you price your home too much above market value, you'll get fewer showings and offers in which the potential buyer is fishing to determine how low you'll go.
 
You'll want to establish your priority list: Are you more concerned with selling quickly or getting the most money possible? You'll also want to contemplate whether you think the agent's suggested price is reasonable and whether you'd pay that amount if you were a buyer.
 
Your agent, as well as friends, relatives, and neighbors, will help you point out your house's advantages and disadvantages that you may not have thought about because you're too close to the house and not as objective as others.
 
A third party will help you think of your house as a commodity—something with positive and negative selling points. At that point you can decide on a price that you deem competitive and in line what other houses in your area have sold for.
 
If you are considering selling and would like our expert opinion of your homes value, give us a call, text or email, we would love to help you out!
 
?-Steve and Sandra

Steve Hill and Sandra Brenner
Windermere Real Estate/FN
Seattle – Northwest
122502 Greenwood Ave N
Seattle WA 98133
call/text: 206-769-9577
email: stevehill@windermere.com

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Posted on November 11, 2013 at 3:01 pm
Steve Hill | Category: Home Pricing | Tagged , , , , , , , , , ,

Pricing Your House to Sell Can Be Tricky

The housing market is finally recovering. Sales are up and so are prices. That means good news for anyone thinking about selling. However, we must be careful not to fall into the trap of over exuberance. Pricing a house incorrectly when it is first listed for sale can be a huge mistake.

Ken H. Johnson, Ph.D. at Florida International University and Editor of the Journal of Housing Research, referring to previous research by John Knight, revealed:

“Sellers as well as Brokers/Agents should therefore be aware of the critical necessity of getting the price correct from the start. Sellers wanting to over list will ultimately take longer to sell and will sell their property for less, on average, according to Knight. Brokers/Agents’ desire to take a listing and get the price right later will ultimately lead to their working harder according to Knight, and they are not doing their sellers any favors.”

Why Are We Bringing This Issue Up Now?

Recent price increases seen in housing have been the result of a lack of salable housing inventory across the country. This inventory challenge is beginning to correct itself and many believe that price increases will begin to taper off.

Bill McBride, the author of the renowned economic blog Calculated Risk, explains:

I think that inventory bottomed earlier this year, and that the NAR will report a year-over-year increase in inventory very soon (probably for September). As more inventory comes on the market, buyer urgency will wane and price increases will slow and even decline seasonally in many areas this winter.”

If you are putting your house on the market, make sure you consult with a real estate professional before establishing your price. That is the only way you can guarantee getting top dollar in this market.

Posted on September 14, 2013 at 11:00 am
Steve Hill | Category: Home Pricing | Tagged , , , , , ,

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