Many home owners do not have a full understanding of how the asking price of real estate should be established. They either base their decision on what they need to get out of the sale in order to buy another home, or they base it on what they paid for the property and adjust for inflation. Another mistaken concept that prevails is that the real estate agent sets the asking price. The truth is that buyers are the ones who establish what your home is worth in today's market.
When a real estate agent comes to your home and shows you a Competitive Market Analysis (CMA), it is made up of home comparables that have recently sold, home comparables currently active & listed, and home comparables that were listed but did not sell in a certain period of time, generally 6 months. What these numbers represent are what the buyers were willing to pay for a home similar to yours (the solds), and what the buyers were not willing to pay (the expired listings). It also gives you a gage as to what your competition is (the currently listed).
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It is important to take these numbers into account when establishing the market value for your house. If you price your home over what the buyers have recently been willing to pay, then your home will most likely not sell. One of the biggest mistakes a home owner can make is thinking they will start with a high house price and then come down on the price later.
The reason this is a mistake is that the first 2 weeks that a home is listed is the hottest time on the market. Buyers who have been looking for a home for awhile are always excited to see a new home listed for sale. However, most home buyers are smart enough to have shopped around and know what houses are selling for in your area. If your house enters the market priced higher than all the rest, the buyers won't even bother looking at it.
Later, when you decide to lower your price to what comparable homes are selling for in your area, it will be too late. You will have missed the initial wave of buyers that a new listing creates. If buyers do look at your home later, they may wonder if you lowered the price because something is wrong with the house. Time on the market always works against you. When all is said and done, you may end up having to come down on the price even farther than your neighbors, just to get it sold.
When you start lowering the asking price of your home because of overpricing, and lowering it again and again, it makes the home look like it's in a bargain bin. You want your home to appear like it's top shelf ... not discounted goods. Would you feel urgency as a buyer if you knew the house has been on the market for 120 days? Probably not.
The smartest way to price your home is to be very competitive in the begining. Sometimes you'll get so much interest in that first wave of buyers, you'll end up with two or more offers at the same time. If several buyers are interested in the same property, it can drive the price up higher.
Finally, keep in mind that real estate agents should always advise you to price your home at fair market value. You should hire an agent based on their qualifications and not how high they are willing to list your house. Remember that in the end it comes down to what the home buyer is willing to pay and not what the agent is willing to list it for.
Is Assessed Value the same as Market Value?
The assessed value of your property is different than the market value. The assessed value of your home is a number calculated by a government entity for taxation purposes to pay the County bills and is determined by the County Tax Assessor. In contrast, the market value for your house is the price that is agreed to by both the seller and buyer of Real Property. Unless it's a distressed property, the asking price for your house will likely be higher than the appraisal.
When you contact me to do a FREE Market Analysis on your home, I'll find home comparables and show you what houses similar to yours are selling for in today's market. I'll also show you a list of all the other houses on the market competing against yours in your price range. We'll also take a look at expired listings to see what happens if your neighbors overpriced their home and it didn't sell. With that information, we can confidently price your home to maximize your net profit and to sell your home fast.
Feel free to Browse my Website for more information and learn how I can assist you with your real estate goals.
Your REALTOR
Scott Neasham
RE/MAX Concepts
120 N 2nd Ave W
Newton, Iowa 50208
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