|
How Sellers Price Their
Homes:
How Much Should I Offer?
I'm
often asked by my clients, "How much under the listing price
should we offer?"
This is an
excellent question. The answer is difficult.
The main reason
I emphasize the education phase of looking at homes is because
that is the best way for you to know value. When you review and
study 40-60 (or more!) listings, then drive by 10-20 and look at
5-10, you will recognize the 'Hot Listings.' You'll also
recognize the "dogs."
Sellers price
their homes differently for 4 basic reasons:
 |
Ridiculously
Overpriced: These sellers have listened to a real estate
agent over-inflate the value of their home in an effort to
obtain a listing. There is a natural tendency on the part of
sellers to list with the real estate agent who gives them
the highest promise. There is a tendency by some real estate
agents to give the seller a high "value" in an effort to
obtain (or buy) the listing.
These homes can be 10-20% overpriced. These sellers may need
a "dose of reality" for a few months before they begin to
realize that their home is way overpriced as compared to
others in the area.
The longer an overpriced home is for sale, the more likely
we can get the seller to face reality and sell at a fair
price.
|
|
|
A Little Overpriced: These sellers fall into 2 categories:
- Those that feel their home is worth every penny of
their asking price.
- Those that want to leave a little "negotiating" room.
These homes can be 5-10% overpriced. Perhaps 75% of all
homes for sale are priced in this range.
|
|
|
Priced at Fair Market Value:
These sellers have carefully and realistically studied other
homes for sale. They have priced their homes very
competitively. These homes usually sell within 4 weeks at or
very near the listed price.
|
|
|
Priced at Below Market Value:
These homes are
priced below value. Perhaps the seller wants a fast sale.
Perhaps the real estate agent recommended too low of a
price. These homes usually sell within 7-10 days, at or
above the listed price. There are usually competing
(multiple) offers, and the price is bid up to, or above
market value. |
Bank Protection:
Even by
carefully studying homes for sale, it's difficult to establish
Fair Market Value. If you're obtaining a new home loan, you'll
be protected by the Professional Bank Appraisal. Home lenders
want to make sure that you don't over-pay for a home.
If the home does
not meet value in the eyes of the bank appraiser, you'll be
informed. At that time, I can re-negotiate the sale price or
void the agreement and refund your earnest money deposit.
Back
to the Top |
