The following was written by my colleague at Greene Realty Group – and she is “spot on” with her ideas. I want to share with you what she has to say: Please read the following; and I invite your comments!
“Written by Missy Watts, Greene Realty Group
Are you pricing your home to sell, or are you pricing your home to stay?
So, you are ready to sell your home. You know what you owe on it, and you know what your neighbor got for her home two years ago. But what price will your home fetch in today’s market? How much money will that leave you? Will you be able to move to your next dream home/retire to the desert/downsize to a condo with the money you make on your sale?
The process starts with a market analysis. You call your Realtor to set it up and as he/she previews the home you demonstrate the updates you have done during your ownership; the new furnace, the new hardwood floor, the faucets in the master bath. Next comes the news you have been waiting for, what is fair market value for your home? We usually give a tight range based upon comparable sales in the area…..the same information an appraiser will use once you get them home under contract with a buyer. You, the seller, will most likely choose the high end of that range, feeling confident that there is that one magical buyer out there who will see the value of your house above other similar properties and write it up within days of it hitting the market. Or, you have a price in mind that is even higher than the range given to you because you need to pay off loan balances and have enough to make the next move and you want to test out the market to see if someone will pay that amount.
Well hold on for a moment and let’s discuss this strategy. Testing the market at a higher price is seldom a good strategy in today’s market.
Today you need to get ahead of the market if you want to sell your home. You are competing with bank-owned homes, short sales and other distressed properties that are priced aggressively and sometimes bring multiple offers. I know that your house may have new counter tops that cost $8000, but the identical home around the corner is bank owned and priced to sell quickly, and that comparable will be used by the appraiser who will appraise for your buyer. That lower value is your new reality.
In Thurston County there have been 1,133 homes sold in the past six months. The average market time for these sold homes was 90 days. The seller received an average of 97.3% of their asking price. This is consistent with what we see “on the ground” in our everyday real estate practice. Buyers will typically offer as low as 5% below list price (sometimes more) and will settle a bit above that. What these numbers don’t tell us is what the sellers are paying toward the buyer’s closing costs. Buyers have been bombarded by the media for the past year about what a fantastic time it is to be a buyer. Sellers are in dire straights! Offer low! Ask for closing costs! Ask the seller to throw in the tractor! And they will ask for all this, and more.
So that means that, as a seller you need to buffer your price to allow for that low offer and closing costs, right? Yes and no. You still want to be careful that you are pricing for activity. I tell my clients that when their house hits the market, if they are not getting any showings it is because of price. If they are getting showings and no offers, it is typically something else. A home priced above competing homes is not going to get activity and you are just burning time on the market, your broker is spinning their wheels and spending money and time marketing a home that is really not priced to sell. What often happens is that you fire broker #1 thinking that the home has not sold by some fault of theirs. Then you hire broker #2 who says to you, “You have tested that higher price and it didn’t work for you…..drop the price and let’s see if that brings you some activity”. Then the home sells. We see this happen all the time.
I either want to be broker #2, or I want to set my sellers up for success the first time. Trust that your broker knows the pricing and the comparable sales and is equipped to price your home correctly for the market. If you don’t like what your broker has to say you can always find a broker willing to list at your price and you will continue to live in that home. If you are really ready to sell, listen to your broker and don’t miss a spring/summer market or become stale on the market at the wrong price. Remember, our commission is based upon your sales price so we want you to realize the highest price for your home possible. But, we also want to be successful. Get real, and get sold!”