How Did You Arrive At That Asking Price Mr. or Ms. Seller?
Sometimes homesellers have misconceptions about how to price their home for sale and sometimes a Realtor will agree to a price in order to get the listing and hope that when the homeowner sees it's not selling, they'll agree to price reductions.
Other Real estate agents build price reductions into the time line, and some will just say: "Let's not waste your time or mine unless you're prepared to list it at my recommended price."
A good Real Estate Agent will explain why they recommend a price.
Here are 5 Mistakes Homeowners make when pricing their home for sale:
1. It appraised for $XXX,000 two years ago...
Your property price should be set by comparable homes that sold recently or are in contract now. Not what it appraised for more than 6 months ago. That's ancient history in real estate.
2. The house down the street sold for $XXX,000.
If the house down the street, or next door was very similar in yours to bedroom/bathroom count, square footage, age and upgrades, then that is probably a good comparable home, and your Realtor will look at other sales to help you price it for a quick sale.
3. My neighbor is asking that price or more for their home.
As price reductions on the Multiple Listing Service show, an asking price is just that, what the seller is asking and should not be used to help price your home unless it can be supported with comparable sales. Not taking into consideration the economic conditions, amount of inventory on the market and needs and desires of potential buyers in your area might effect the potential price your home will bring. Your neighbor's home could be in a more desireable location, or vary in size, age and condition.
4. I put $XXX,000 in upgrades in, I should get that amount back! An experienced Realtor will tell you that all upgrades don't get recouped and what you consider a bonus might not appeal to every buyer.
5. I owe $XXX,000 on my mortgage and I need to get that much or I can't sell.
This should be self explanatory, but what you owe and what you home is worth are two very different matters. If you owe more than the value, a short sale is something to consider, where you get your property into contract and then approach the lender to ask them to agree to a payoff that is “short” of the loan balance. This alternative comes with tax and legal consequences and should only be entered into after seeking advice.
Whether you're selling or buying a home, call me to be introduced to a great Realtor. Besides having a strong network of excellent Realtors, I'm a member of the Multiple Listing Service and know who's active in the San Francisco Bay Area.