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1) WHO DETERMINES THE SELLING PRICE OF A
PROPERTY?
The Buyer! By
"comparison shopping," buyers determine the relative values of similar
properties, and then make their offer. A property will never bring a
higher price than the one that an informed, ready, willing and able
buyer will pay.
2) HOW DO COMPARABLES OF PAST SALES AFFECT
THE PRICE?
Past sale
comparables, as recorded by the Multiple Listing Service, are used by
real estate professionals to help sellers set a price. This is based on
what buyers in the last six months have been willing to pay for
properties that are much like, though not identical, to the sellers'
property. These comparables are also used by appraisers to determine
the appraised value upon which the lender bases the amount which they
will lend on the property. A rapidly changing, up or down, market will
affect these values.
3) HOW DO PRICES OF ACTIVE LISTINGS ON THE
MARKET AFFECT THE SELLING PRICE OF A PROPERTY?
These are the
properties that a buyer (and their Buyer Broker) will "comparison shop."
They will compare size, location, quality, condition, amenities and
price of properties in a range of prices, and make a judgment about
which fits their needs and "pocketbook" best. By the time most buyers
make an offer, they are well educated about the market and make an
informed decision as to the values of specific properties.
4) HOW DO WITHDRAWN AND EXPIRED LISTINGS
AFFECT HOW WE CAN DETERMINE A GOOD LISTING PRICE?
Withdrawn and
expired listings usually represent sellers who have become
disillusioned with having their property on the market or have had a
change in circumstances. They may have decided to rent it for a period,
or to keep it off the market for awhile so that prices might catch up
to their selling price. Many times these are overpriced properties that
were unsuccessful in the market place.
5) HOW DOES THE CONDITION OF MY PROPERTY
AFFECT ITS VALUE?
Buyers may be
comparing your property to new construction or to immaculate and
completely updated older homes, with new bathrooms and kitchens, new
carpet and window coverings. Many people do not want to be compelled to
redecorate before moving in or, even worse, while they are living in
the home. It may be a matter of cash, time, or abilities, but in the
real world, most people want to move into a clean, up-to- date,
inviting home. The only way that some buyers will consider a
"fixer-upper" is for a substantial discount, a discount that will be
considerably more than actually would be needed for the job. So, if
sellers want to get "top dollar," their property must be in "top
condition."
6) HOW CAN WE DETERMINE THE TRUE VALUE OF
A PROPERTY WHEN PLACING ON THE MARKET?
Using comparable
past sales, withdrawn and expired listings, and properties currently
for sale, your REALTOR can help you determine an offering price and
introduce it to the market. A testing of the market occurs within the
first two to three weeks, when enthusiasm is at its highest, with the
beginning of marketing to the Realtor community and to the public. A
pent-up market of buyers will either accept or reject the property and
its price.
7) WHAT IF WE HAVE LOTS OF SHOWINGS OVER A
PERIOD OF A FEW WEEKS, BUT NO OFFER?
If there is a
lot of interest, and there are many showings, but no offer, we can
determine that the market has rejected the price and the sellers can
then reconsider their offering price. Or the price can remain the same,
the market testing can continue, and sellers can wait for new buyers to
come on the market.
8) WHAT IF WE HAVE FEW, OR NO, SHOWINGS IN
THE FIRST COUPLE OF WEEKS?
If there are
few, or no, showings, there may be no buyers in the price range in the
market at the time (this is especially true in the higher price
ranges). There may be many offerings in the price range and this one
doesn't stand out as particular good buy. Or, Buyer Brokers may be
rejecting the price out-of-hand because of their knowledge of how the
price relates to past sales and competition in active listings in the
price range. They are counseling their buyers on the market place and
will not knowingly waste their clients' time inspecting what they
perceive as overpriced properties.
9) WHAT IF I "NEED" A CERTAIN AMOUNT OF
MONEY TO NET OUT OF THE SALE?
The amount that
a seller needs has no relationship to what a buyer will pay for the
property.
10) HOW DOES THE TIME VALUE OF MONEY
RELATE TO PRICING MY PROPERTY?
"Time is
money." This is most evident when an overpriced property has languished
on the market for months, and maybe years. Many a seller has regretted
not accepting a lower offer at the beginning of the marketing period
and/or not reducing the price earlier to the price that was eventually
accepted. The quicker a property sells, the higher the selling price.
The more time goes by and the more buyers that reject the property at
its listed price, the more "shop-worn" it will be perceived and the
lower the price will have to be to attract the final buyer. Buyers
realize that the property has been rejected by many other buyers who
looked and didn't buy. Buyers also perceive that sellers of a property
that has been on the market for a length of time are going to be
desperate for a sale and that they will accept a "low ball" offer.
11) WHAT IF I'M NOT IN A HURRY TO SELL,
BUT WANT TO "FISH" FOR A BUYER AT AN INFLATED PRICE?
Sellers that
are not serious and realistic about selling their listed property risk
the "shop- worn" syndrome noted above and an eroding of value of their
property as time on the market increases.
12) AREN'T THERE "RICH" BUYERS OUT THERE,
THAT WILL JUST LOVE MY PROPERTY SO MUCH THAT THEY WILL BE HAPPY TO GIVE
ME MY PRICE NO MATTER HOW FAR OFF THE MARKET VALUE IT IS?
No.
13) WHAT'S THE BOTTOM LINE?
When realistic
pricing is combined with effective marketing by a professional and
experienced REALTOR , there is a buyer for every property. Any property
can be sold in any market.
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