Knowing How To Price Your Home
(The cooling real estate market is creating havoc for many sellers who are finding out that their home may not sell as quickly as they originally anticipated.)
During the market "boom" experienced for five years prior to 2006, selling your home was almost as easy as snapping your fingers. Sellers have to learn to adjust to the slowing market to find effective ways to establish a marketable asking price.
The September 28, 2006 article, "Pricing Your Home Gets Trickier," written by Ruth Simon and published in The Wall Street Journal, explains how the old ways of establishing your asking price may no longer be valid.
Traditionally, agents and brokers set listing prices by reviewing how much comparable homes sold for within the neighborhood. Now, with home prices declining and the available supply increasing, this method of comparable sales is becoming irrelevant.
Also, many potential buyers are playing the waiting game until prices fall even farther. And with the increased inventory of homes for sale on the market, finding a price that will stand out while still funding a lucrative profit is becoming more difficult.
The proper procedure for selling a house varies from market o market.
"Some brokers are telling customers they need to under price the competition -- even if they think their home is more attractive. Sharon Baum, a senior vice president with the Corcoran Group in New York, recently listed a two-bedroom, two-bathroom apartment for $3.7 million. That was $100,000 less than the asking price for a similar unit five floors below, even though apartments on higher floors typically carry bigger price tags. 'As buyers have more choices, you've got to make your apartment stand out,' she says."
Sellers are being urged to slash prices on their asking price or risk chasing the downward market and have to cut prices by a much larger percentage.
"If a home doesn't get any showings in 21 days or gets 10 showings but no offers, Ned Redpath, president and owner of Coldwell Banker Redpath & Co. in Hanover, N.H., often advises the seller to slice the asking price by 10%. 'We don't like to see $2,000 or $5,000 price adjustments,' he says. 'We want to see a real whack' that attracts attention."
You have to pay close attention to home price trends even in markets that have remained strong. Even in relatively strong markets, brokers are paying closer attention to price trends.
Wallace Perry, president of Coldwell Banker United, Realtors, Carolinas region, says that he checks multiple-listing service data every week instead of once a quarter to see how prices or sales have changed. If a pattern emerges for a couple of weeks in a row, it may be time to adjust your asking price.
"Other brokers are using incentives to counter competition from new home builders. In Tampa Bay, Fla., Craig Beggins, president of Century 21 Beggins Enterprises, recently put together a list of 16 incentives homeowners can offer, from paying the mortgage for several months, to outfitting a media room with a big-screen TV, to picking up the cost of day care for some period."
The seller's market has become very competitive. Unfortunately, this means that in order to sell a home you are going to have to offer drastic price cuts or other incentives. But it will be a lot more expensive to have to make the monthly payments instead of losing a few thousand dollars on your profit.