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You decide to sell your home. After interviewing several local brokers, you're presented with a range of figures. Even though the suggested prices are based on recent sales of like homes in your community and look at properties now on the market, they differ.
So which do you choose?
The higher price is the most attractive, but it may not be the better price or even the wisest price.
"Gone are the days when a seller can offer properties at inflated prices with the thought that buyers can make an offer," says Terry Ferrell, in Kansas City. "If your property is perceived as overpriced not only will you not receive offers but you'll help other sellers sell properties that are correctly priced."
"Buyers today are represented by buyer's agents in the vast majority of transactions," he continues. "Knowing that buyers are better informed forces sellers to examine the market thoroughly before determining price."
It's understandable that owners want the most for their properties. A high selling price is not only good for bank accounts, but for many owners high prices are also a status symbol and ego reflection.
So, understandably, if you have several pricing suggestions backed up by solid research it's hard to turn down the biggest number. But how do you know which number is best?
It's a judgment call, one that differs for each market and each home. There are no absolute guidelines to point the way. Highest is not always best, but neither is the lowest suggested price nor a price in the middle.
Look again at those suggested selling prices:
- Is each broker experienced in your community and with homes like yours?
- Why does each broker advocate a given price? If you were a buyer would such reasoning seem compelling, explanations which would cause you to make a strong bid?
- Suppose you placed your home on the market at the highest recommended price. What would happen if the price was later reduced? How long should you test the market at the high price?
- What happens if a home is not quickly sold? Owners continue to pay taxes, mortgage bills, and other costs. If you have also acquired another home, at what point does holding on become too costly?
A home that becomes stale on the market results in potential buyers questioning why it hasn't sold.
"A house that is overpriced by 10 percent of its actual market value is much less likely to sell within the first 30 days than one priced within 5 percent of its true value," say the firm. "Not only will an overpriced home take longer to sell, it is also likely to sell for less than its actual value. This is due to the negative effect often associated with properties that have been on the market for a longer than average time."
By "stale" brokers generally mean that a property is not "new," fresh," or a novelty. You may have lost that one buyer -- the only one you need -- because they were turned off by the price.
"A realistic asking price will help you sell your home quickly and for top dollar," LaPlage Signature advises. "By pricing your home close to market value you ensure that the difference between your asking price and the price an informed purchaser will be willing to pay is less, resulting in the greater likelihood of competing offers."
What if you get a "bite" from a prospective buyer -- and for the inflated price set by that optimistic broker of yours?
First, it may be that the broker was not optimistic, merely on target.
Second, look carefully at the offer. Is the price really so high -- or is the offer filled with concessions and discounts?
Third, does the buyer need a loan? If yes, can the property be appraised at the selling price? A low appraisal means either the buyer must come up with more cash, the price must be lowered, or both. Or, simply, the deal could fall through.
Back to the several brokers with several different suggested market values. Maybe each makes a compelling case for a given price, each is experienced, and each seems able to market the property -- and yet their pricing estimates are thousands of dollars apart.
Now what?
Consider this: Get an appraisal. An appraiser will provide an independent estimate of value. There is a fee for this service, but then a lot of money is riding on the pricing decision you make.
Not only can an appraisal help you make a pricing decision, it can also be a valuable selling tool. After all, when the home is placed on the market, the broker can say, "we think the price is reasonable and conservative -- would you like to see valuation done by an independent appraiser?"
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