Setting A Listing Price
As you prepare to put your property up for sale, setting a listing price is the most critical factor in terms of the return you’ll receive on your investment. That’s why you should always get a professional evaluation before deciding the listing price. Look at the facts and do an honest assessment of the property, based on several factors, including but not limited to:
- Market conditions
- Condition of your home
- Repairs or improvements
- Selling conditions
In real estate terms, your real “Market Value” is the price at which a particular house in its current condition should sell within a particular time-frame and it looks at all the factors involved in coming up with a list price. The Actual Value of your home is given to you by an appraiser, however, many things have changed in the appraisal arena since 2010 which have attributed to a decline in housing values for many Upstate home owners.
Prior to July 2010, when the President signed into law The Dodd-Frank Wall Street Reform and Consumer Protection Act, mortgage lenders were able to call upon local appraisers to order appraisals. Now all appraisals are ordered through national clearinghouses, which takes the local appraiser right out of the picture. As if that isn’t bad enough, an appraiser must now include foreclosures, short sales, and any type of a distressed sales into their comps! And this is why we here in the Upstate were seeing declining values; the declinews not due to any “bubble market.” Thankfully, values in our area are now back on the upswing!
If the listing price of your property is too high, this could cause several things to happen:
Limits buyers visiting the property – Potential buyers may not view the home because it appears to be out of their buying range or “over priced”.
Limits the number showings – Other salespeople may be more reluctant to view your home and show it to their prospective buyers.
Used as leverage against you – Other Realtors® may use the price of the subject property to drive the sale of other homes that are more competitively priced.
Longer time on the market – When a home is on the market too long, it may be perceived as “stale” or defective. Buyers wonder, “what’s wrong with the property,” or “why hasn’t this sold yet?”
Lower price – A home that is priced too high and is “stale” could lead to a lower selling price in the end. To sell it you will have to reduce the price, sometimes more than once. In the end, you run the risk of getting less than if it had been properly priced in the first place.
Wasted time and energy – A bank appraisal is most often required to finance a home, so if it is overpriced it will not appraise and a buyer’s lender will force a reduced price.
Can you depend on the market values given on the many online sites to set your listing price? Not really. These estimates don’t take into consideration things such as the state of the market or buyer trends, so the value you receive from online sites may not be reliable.
A Realtor® will do a CMA (Comparable Market Analysis) to help you determine what your listing price range should be. The local MLS (Multiple Listing Service) is the online database a Realtor® uses to see which homes are currently on the market and at what listing price, what price homes have sold for, how much money in seller concessions was given to buyer, and what homes have had price reductions during the listing period.
Real Estate Professionals have known for years that well-kept homes with listing prices set correctly from the start make for a faster sale at the best price.