Understanding how sellers price their homes can empower you, as a buyer, in the negotiation process as you team up with your Realtor.
How
Much Should I Offer?
Clients
often ask, “How much under the listing price should we offer?”
The
best way to understand market value is through comparative research. Professional real estate consultants review
and study at least 40 to 60 listings, visit 10 to 20, and inspect 5 to10
properties to develop a sense of relative worth for properties in a given area.
Additionally,
a professional appraisal factors into determining the fair market value of the
home. An appraisal protects you because Lenders
want to make sure that you don't overpay for a home. If the home value does not meet the sale price
in the eyes of the appraiser, they’ll let you know. At that time, the Realtor can renegotiate the
sale price or void the agreement and refund your earnest money deposit.
There
are four basic factors that influence how sellers price their homes:
1.
Sellers Get Poor Advice
Some
real estate agents inflate the value of the seller’s home in an effort to
obtain the listing. There’s a natural
tendency on the part of sellers to list with the real estate agent who gives
them the promise of the highest selling price.
When
homes are overpriced, they
- Stay
on the market longer
- May
not sell
2.
Sellers Set an Unrealistic Price for Emotional Reasons
These
sellers believe their home is worth every penny of their asking price for
personal reasons. Sometimes they lose
their objectivity and focus on features that seem more valuable to them (rather
than to the buyer). For example, the
suede wall-covering in the master bedroom may not appeal to potential buyers.
Additionally, some sellers, anticipating
reticence to buy, feel it’s a good idea to leave a little “negotiating” room in
the asking price.
3.
Sellers Price their Home at Fair Market
Value
These
sellers carefully and realistically study other homes for sale, and may consult
with a real estate professional. They price
their home competitively, and it usually sells quickly at (or very near) the
asking price.
4.
Sellers are Motivated to Sell
When
sellers want a fast sale, they price their home below fair market value. These homes usually sell right away, at or
above the listed price. There are
usually competing offers.
I
will help you determine the fair market price for any home. My job is to ensure that you have the tools
and information you need to make an informed decision. I will help you every step of the way.
(Courtesy of By Referral Only)
