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Round Two of 'The Price Is Right'

December 28, 2006 By:
Andrew Lasner, JE Feature
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Let us re-emphasize how to price your home in the current buyers market. As written previously, homes that are overpriced don't sell, and can scare away potential buyers.

When listing your property for sale, do yourself a favor and tell your agent that you trust their professional opinion regarding price. This will allow your agent to be candid with you, which can mean selling your home at market value now, instead of several months from now.

Most agents simply don't want to tell the seller the true value of the home if it's obvious that the seller wants more than it's worth.

Home buyers typically look at houses in ranges. Set a price that's too high, and they'll think that your house is too steep for their wallet; they won't even bother to take a look at it. Buyers are immersed in the market. They've seen lots of properties, and probably know the reasonable price ranges for ones they are interested in.

So, if your selling strategy is to set an unrealistically high price in the hopes that someone will bite, rethink that strategy. Homes that are overpriced will generate no offers, no negotiations and no sale -- period!

You want the most money possible from the sale of your home, right? So, what's the best way to accomplish that? Let's keep things simple. In today's market, there are only two issues to consider when selling your home: your motivation to sell, and the price you ask for the property.

If you really want your home to sell, then it must be priced realistically in terms of current market conditions. On the other hand, if you're not highly motivated to sell, and, in fact, don't want the home to sell quite yet, you'll probably choose to price it at a point where it will not. (Beware of that approach, though. An over-priced property will most likely become devalued over time as it becomes stale on the market.)

Homes that are on the market too long become "shopworn," leading agents and buyers to conclude that something must be wrong with the property.

Set your price too low, on the other hand, and you'll leave a pile of money on the table. Price it right, and it should sell quickly, regardless of market conditions. Who has not seen a TV ad featuring a couple boasting about how they sold their home in three days with the help of some for-sale-by-owner service?

That might sound wonderful, but those may be classic cases of homes that were well underpriced.

Comparative Analysis
How do you figure out the right asking price? Many resources are available to help you determine the fair market value -- the FMV -- for your home.

One of them is a comparative market analysis provided by a local Realtor. It's a written analysis that compares your house to others like it in your area that sold recently or are on the market in your neighborhood.

A comparative market analysis offers factual information about the houses: Number of bedrooms and baths, square footage, amenities like fireplaces and swimming pools, as well as the listing prices and the sold prices.

Getting such an analysis is easy. All you have to do is call a Realtor, even if you are planning to sell your home on your own. The Realtor will come to your home and generate a comparative market analysis and a suggested listing price for you in the hope of getting the listing.

I recommend getting a comparative market analysis from three different agents. Chances are they'll all be different, but should all fall within a range.

Try to identify the real estate agents who do the most business in your neighborhood. They will be most familiar with details of other houses in the area that have been marketed successfully or unsuccessfully.

A comparative market analysis, however, is not the "be all" and "end all" in determining price. It can be incomplete or too dated to reflect current market conditions and, of course, no two houses are ever exactly the same.

Also, they don't take into account subjective factors like curb appeal, an especially eye-pleasing view or proximity to a bus stop, which explains why some experts recommend getting a professional appraisal, in addition to a comparative market analysis.

Several things will also need to be considered:

· What have homes similar to yours in your neighborhood recently sold for? These are called "comps" (comparable sales), and are a vital piece of information.

· How does your home compare to the competition? After all, buyers don't see just your home, right?

· What is the condition of the property?

· What are the current market conditions: interest rates, buyer's or seller's market, supply and demand, etc.

Real estate agents are not professional real estate appraisers, so some may inflate the value of your home just to get the listing.

You should also consider getting a professional appraisal even before you set your asking price; it's a good investment for any home seller. For one thing, a professional appraisal done by a state-certified property expert will be required if your eventual buyer intends to finance the purchase with a mortgage.

The appraiser will first inspect your property from foundation to attic and note its features, including quality of construction and amenities. Then the appraiser will perform a market analysis that will compare your property to similar properties that have sold recently in your area. The appraiser may even call real estate agents in your area to determine market conditions in your neighborhood.

When that's all done, the appraiser will write up a report, and you'll know the appraised value. That is not the same as the market value, which is the highest price that a property will bring in an open and competitive market.

Remember, your home will only sell for the amount that a buyer is willing to pay for it. If you and the potential buyer do not agree on a fair market value, then, essentially, you become the highest bidder for your home, and you can continue to own it.

Andrew Lasner is a Realtor and a senior real estate specialist at Keller Williams Preferred in Newtown. He can be reached at 215-860-0800 or e-mailed at: Andrew1@ comcast.net.

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