As Real Estate professionals we tour more homes in a month than the average consumer will tour in a lifetime. Consistently we see the same marketing mistakes over and over again.
- Clarks Summit Home For Sale
A home will sit and languish on the market for months without an offer. The seller gets frustrated when the house does not sell. The Realtor gets frustrated when they can't produce a viable buyer. The seller blames the Realtor. The Realtor blames the market.
The reality is the culprit is one of the 7 deadly sins. Any one or all of them can negatively impact the desirability of a home.
The following is part one of a 7 part series discussing each issue in detail. The purpose of these articles is to educate sellers and give them food for thought. Selling your home can be a horrible or heavenly experience. It all depends on preparation and execution.
Selling a home is much like baking a cake. To have the end result come out right the correct ingredients have to be blended, and mixed property before you put it in the oven. If a home is well prepared and marketed aggressively the end result should be a fairly quick sale.
The number one deterrent buyers encounter when considering the purchase of a home is PRICE. A good Realtor will prepare a CMA and make a recommendation for pricing your home. An experienced Realtor is not swayed by what your sister, neighbor or mailman told you the house was worth. What your neighbor got for his house two years ago have absolutely no bearing on what YOUR home is worth today.
The appraisal you got in 2010 when you took out an equity loan or refinanced your house is useless. The market value on any day of the week is only 90 days old. When you get a contract on your home and the appraiser comes out - they do not use comparable sales older than 90 days unless unusual circumstances exist.
Typically a seller will look at what they paid for the home, how much the improvements cost, and factor in their marketing and closing costs to arrive at a minimum sales price. BAD MATH!
The way to arrive at the current value is to compare at least 3 recent home sales and adjust for non-conforming features. One house with a fire place compared to a home without a fire place requires a mathematical adjustment. A home with a two car garage is adjusted if the home you are selling only has a one car garage. A Realtor knows how to adjust for these factors.
Overstating bedrooms is another major problem with pricing. To be considered a legitimate bedroom the room must have two methods of ingress and egress plus a built in closet. A room used as a bedroom in the basement usually cannot qualify as a bedroom. It cannot be included in the bedroom count. The second method of ingress or egress is usually a window. That window must be large enough, and located on the wall so that an adult can easily open it and climb out to ground without impairment.
Padding the price for reductions is another way to over price the home. If the recommended sale price is $285,000 sellers are tempted to want to list the home at $305,000 to allow for a price concession. By over pricing you shrink the number of viable buyers considerably. Many first time home buyers in the market place today are looking at homes under $300,000. They use the internet to search for homes. If their budget is under $300,000 they rarely search in the over $300,000 price range. A viable buyer may never see your home advertised if it does not come up in their search query.
" I am not going to give my house away". "I need to get X because I need money for my next home". "I need to get X because I have other bills to pay off". If you are pricing based on these factors you will over price your home and it won't sell. Add the carrying costs for bad math. Taxes, insurance, mortgage payments, repairs, heat, utilities, upkeep for 6 months or a year. For the average home owner that might add up to another $10,000. If it takes 6 months or a year to realize your pricing was wrong - you just decreased your net by another $10,000.
"I have to get X because I owe X on my mortgage". Now that is a viable issue to discuss with your Realtor before you attempt to sell. If you owe more than the home will realize there are other steps you might consider before you try to market your home. If you owe more than you can sell it for you will have to bring cash to closing to get it sold.
What is the best way to price a home? Look around. There may be several homes on the market near you. Some may have sat on the market for a year or more. Buyers look but do not buy. To get yours sold in the quickest length of time structure your asking price about 5% below a comparable home which has sold. It's easier to justify being firmer on price when you can show you already priced to be competitive.
Price cures all ills. If your home is not selling try a price reduction. If a home is well priced and in good condition it will sell rather quickly. Inventory is very low in the Greater Scranton area. Some homes are selling in less than a week. Price, condition and presentation equal success.
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