Pricing your home how and why. 9-27-07
I am sure other Real Estate professionals will relate to at least some of this. As you talk to potential clients about listing their home you seem to see reoccurring themes, at least I do.
Have you ever gone to a listing appointment and heard any of the following:
1. The neighbors or the people down the block have theirs listed for $ xxx,000.00
My response: Is it still listed and if so how does that relate to anything. Appraisers base their market values on what has sold in the area that is comparable to your home, and has SOLD. Usually in large markets within the last six months. In rural areas they will stretch out to what has sold in the last year. Because your neighbor has priced his or her home above market value causing it to still be on the market, does that mean you want to do the same. As my father used to say; "if they jump off a cliff will you jump too".
2. I don't need to sell
Look if you are considering listing your home for sale. You either need to sell or want to sell in either case pricing the home properly is the first step.
3. My house is worth more then my neighbors because I have a pool.
My response: Only if they want a pool, want to clean a pool and don't have small children they are afraid will be drowned in that pool. Much the same concept applies to a horse setup, a tennis court, sunroom, bar, etc.
4. The one I love the most, is when I explain that the rooms are small (or something else is inferior) compared to the properties they want to compare their home to, in order to establish price. The man of the house says I know but I have been sitting in my lounge chair for the last five years thinking about how I could just knock out that wall and expand that bedroom. Come look see there is room here beside the house all they would have to do is ------------.
My response: So think you should be able to get the same price for what you thought about doing, as you would if you had actually done it?
Here are a few things to think about when you are considering pricing your home to high. What is the cost to you if you wait six or eight months and eventually have to drop the price anyway. Have you been paying HOA fees for an extra 8 months? How many mortgage payments will you pay while waiting and how much of that was pure interest. What do you pay in taxes each month? Are the prices increasing on the home you will buy when you move. How long did you have to live with prospective buyers coming into your home? How long did you have to keep your home looking like no one really lives there (keep it spotless)? Did you miss the home you really wanted to buy next because it sold while you were waiting? The best part about this (for the Realtor) is you will probably fire the Realtor who advised you from the beginning you were pricing your home to high. because after all he or she just didn't work hard enough or didn't spend (throw away) enough money advertising your over priced home. Then most people hire a new Realtor take the advise of their first Realtor and drop the price anyway. Why because they can never admit it was not their Realtors fault but their own. The last statement is good example to use when trying to train new Realtors not to take overpriced listings. I heard someone say once "it's always better to be the second wife and the second Realtor.