Profitable Home Selling
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Despite overwhelming evidence to the contrary, many Sellers make the mistake of over-pricing their home when they initially list it for sale. They invoke the “let’s start high and we’ll see what happens” strategy. In an active market, statistics have proven that the best chance of selling your home is in the first two weeks. If a property is priced too high, other properly priced homes in the area will sell while it will sit idle with limited or no showings at all. The market will always give an overpriced home another chance, but through the period of price reductions, you will find that you lost valuable time and the perhaps the perfect Buyer.
Another issue with over pricing your home is having to deal with the results of an appraisal that comes in below the contacted purchase price. When this happens, the Buyer either must agree to come up with a higher down payment or the Seller must lower the price. Either way it’s not a pleasant situation for both parties. This is another reason to consult with and listen to your Agent.
When beginning this process, ask your Agent to provide six months of complete sales history for your area.
Detailed information about the listings should include the total number of bedrooms, bathrooms, finished or unfinished basements, square footage, pool, etc. It should also include the List Price, Sales Price, List Price to Sales Price Ratio, Price per Square Foot and Days-on-Market.
Look at all the Active, Contingent, Expired, Pending, Withdrawn and Sold listings in the data. Have them send links to the homes in the data from the Multiple Listing Service. This will allow you to go online to compare your home to the listing pictures.
The Active, Contingent and Pending listings will give you the best indication of the current market conditions. You should also take note of the Expired and Withdrawn listings individually to determine why the property didn’t sell. If any of the listings appear to have been in good condition but didn’t sell, look at the price. If the property was listed above the average of the homes that have sold or that are pending, you may have discovered the price ceiling for the area.
Also look at the Days-on-Market (DOM) figure. If a home took over 120 days to sell, ask the Agent to see if there were price reductions while it was listed. This can also be an indication of the price ceiling for that area.
Unless your Agent can verify the square footage of each home, don’t get fixated on the sales price per square foot calculation. Tax records are notorious for incorrect square footage information. This should only be used as rough estimate to run against the square footage of your home. This will help adjust for any size difference your home may have with the comparable sales.
If you are still uncomfortable with how your home is being priced, ask your Agent to take you to a few active listings in the area. When you start on the tour, remember to put on your “buyer’s hat”. While it may be hard to do, also try to put aside any bias that you may have toward your home. Take a neutral stance and be open to what you are about to see.