Selling Your Own Home; Step 2 - Price of a Home
In the previous article, we discussed the research and renovation that can help ensure that your home is on par with others in your neighborhood. This gives it the best chance of selling at a comparable price to others in your area.
Whether you opted for major renovations or a simple coat of paint, the next step in selling your own home is to create a pricing and sales strategy. In other words: decide what you’re going to ask for the home, determine how much you’re willing to accept, and decide how long you’re willing to wait for the price you want.
If this is the first time you’ve sold a home on your own, you may have previously left these pesky pricing details to your realtor. But after “location,” the most important aspect of real estate is price. Real estate professionals do know pricing strategies, current market conditions, financing availability, and buyer behavior, so if you’re selling your own home you need to know a little about these things too.
There are just a few simple rules to setting the price of a home:
- Most homes are over-priced to allow for negotiation between the seller and buyer.
- Buyers expect sellers to take less than the asking price.
- Buyers expect people who are selling their own homes to take less than those homeowners who are working with a realtor.
- Buyers will look at homes they cannot afford.
- Expect a few “low ball” offers from people who are trying to get a really good deal.
The tricky part: many people sell their homes without an agent in order to make more money by “avoiding the commissions.” Buyers, however, expect to get a discount for working direct with the seller and are expecting to get at least part of the savings passed on to them in the form of a “better deal.”
Keeping all these things in mind, how do you decide how to price your home? It’s important to develop a pricing strategy.
First, get a realistic view of the market and real estate pricing. There are a few public sources of information that are available to assist you. Tax records are one source of valuation available to both sellers and buyers. For years there has been a common understanding that tax record values are low. Real estate appraisers who work for buyers, sellers and their mortgage companies often put values of 15 – 20 percent higher than taxable value on real estate appraisals.
Over the last couple of years taxing authorities have been attempting to close this gap (and raise their own tax revenues) by re-evaluating properties and adjusting their values up. In many areas, this is being done as properties sell. The 15-20 percent rule is fast disappearing as taxable values get more in line with what real estate is actually selling for.
Another source of information to set a price of a home is good honest research. Drive around your neighborhood and collect the flyers from the boxes in front of homes that are for sale. Go online and look for homes in the price range you want to ask and see what else is available. Compare what you are offering to what other sellers are offering. Pay close attention to other homes being sold by owner.
Once you have a good idea of pricing for comparable properties, think about your objective. If your goal is to maximize the price you can get for your house, you may need to be prepared to wait a little longer for it to sell. If you are interested in a fast sale, you can price the home attractively and thereby generate more traffic and a bargain-hunting buyer.
As part of your pricing strategy you also need to decide if you’ll work with realtors.
Many people who sell their own homes make the mistake of locking out potential buyers who are working with agents. Conversely, many agents refuse to show homes that are for sale by owner to their clients, even avoiding the streets that the FSBO signs are on when driving clients around.
Realistically you need to understand that your buyer pool shrinks dramatically if you refuse to work with clients who are using agents. Many sellers indicate “Agents Welcome” on their marketing materials, but most agents will require that you agree in writing to a sales commission before they even bring their clients by. Some will ask for a “one day listing” in order to qualify for a commission from a buyer they truly think will buy your home.
Flexibility, particularly in a tough real estate market, is the key to success.
Perhaps one of the best things about selling your own home is the ability to raise and lower the price and experiment with your marketing and pricing strategy. Changing the price of a home for sale by owner home is as easy as changing the price on your flyer or sales sheet or changing what you say when potential buyers call and ask, “How much?”
Successful individual sellers also monitor new homes on the market every week and adjust their prices up or down in an effort to remain competitive or to meet their own timelines for a sale.
When selling your own home , remember that buyers are looking for two things: the right house at the right price. Even if your house is perfect and just what a buyer is looking for, if the price is wrong, the buyer will never show up.
Next: Selling Your Own Home Step 3 = Your Marketing Plan
Thank you to Connie Holubar for this "Selling your own home - Part 2 - Pirce of a Home" article.
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