Realistic Pricing: The Key to Selling Your Home

Are you trying to determine the value of your home? If you are planning to put your home on the market sometime soon, determining its actual value is the first and most important step in the process. After all, you need to know the value of the home in order to determine a fair asking price. At the same time, you want to get as much for your home as possible. So, how do you go about determining the right asking price for your home?

Pricing Too High…..Big Mistake

Unfortunately, many sellers make the mistake of asking a price that is more than the fair market value. For these sellers, the belief is that asking a higher price will allow them to sell the home for its actual value. According to this logic, asking for more than the fair market value gives the buyer more room for negotiation. While this may seem logical, the reality is that overpricing a home can cause it to sit on the market for too long. Many propects will not even take the time to look at the home because of the perception that the seller’s may be unrealistic. As a result, the seller may ultimately end up selling the home at a price that is well below the actual market value.

Time on the Market

It is a well-known fact within the real estate industry that a home loses value the longer it sits on the market. Furthermore, the longer a home sits on the market, the greater the probability it will not sell. In fact, a simple formula is used to calculate what is known as the “absorption rate,” which is the probability of the home not selling. To determine the absorption rate of your property, simply divide the number one by the number of months of housing inventory on the market. If there are 12 months of housing inventory in your market, for example, the probability of it selling in any given month will be 8.3%. This means the probability of it not selling is a whopping 91.7%. With odds such as these, you certainly don’t want anything to stand between you and getting your home sold – and that is just what will happen if you ask for more than the home is actually worth when you put it on the market.

Time is Money

Of course, the longer your home stays on the market, the more it is costing you. After all, while your home sits on the market, you still have to pay the mortgage, utilities, insurance and other costs associated with maintaining the home. By holding out for an unreasonably high price, you increase your expenses by keeping the house on the market for longer than necessary. Furthermore, even if you do find someone who is willing to pay what you are asking for your house, the buyer will be very unlikely to find a lender who will provide the buyer with a loan. Remember, this is an investment for the lender and paying more than the actual market value simply is not a good investment.

Correctly Pricing Your Home

So, how do you go about determining a realistic price for your home? Getting an appraisal is a good first step, but you and your Realtor can use a number of other methods to determine the best asking price possible. For example, your Realtor can do a Comparative Market Analysis (CMA) to compare the prices of comparable homes in your area on a price per square foot basis. Or, you can use online resources such as Zillow.com, which allows you to learn more about competitive pricing as you determine the price to ask for your home. Although Zillow’s Zestimates are sometimes a useful tool, appraisals and CMA’s are much more reliable and accurate.

If you are considering listing your home in this challenging real estate market, proper and realistic pricing is a must. Work with your Realtor to establish a competitive asking price so that you can get your home SOLD.

About the Author: John C. Allen is the broker and owner of Allen Real Estate Services, a 30 year real estate firm in Sarasota, FL. He specializes in representing buyers and sellers of Sarasota luxury homes for sale, including condominiums, exclusive golf communities and waterfront houses. Stop by his award-wining website to lean more about the Sarasota, Florida area. In addition there is free access to thousands of MLS listings and detailed information on hundreds of neighborhoods and condo communities. From vacation properties on the barrier islands to downtown Sarasota real estate, John’s team of Internet specialists can help you explore all of the options currently available.