What's a good price for your home?
I will prepare a Comparative Market Analysis (CMA) for your Home. A comparative market analysis provides the background data on which to base your list-price decision. Prepared exclusively for you, this analysis contains a summary of the recent Real Estate transactions in your Subdivision or your Building for properties that are similar to yours. While none of the properties included in this Analysis are exactly like yours, they do provide a good basis by which to compare your property with the "competition". The CMA also contains documentation of each property, whether it is currently available for sale, recently sold, pending sale, or was listed but did not sale (expired). A short description of each property is provided, followed by a summary table of each property's key features, which allows you to compare the features of your property with others in your area. Your home may have special features or improvements that could affect the price range in which it should be listed. Also included in the CMA is a "Net Sheet" that itemizes typical selling costs and the estimated "Net Cash" to be expected from the sale of the home.
Overpricing is unacceptable and dangerous. We are not in a market where prices are increasing. In fact, in reviewing the current sales of homes, prices are decreasing. Overpriced properties tend to take an unusually long time to sell (if they sell at all), and they typically end up being sold at a lower price than they likely would have had they been priced properly in the first place. Accurate initial pricing and reductions when necessary are crucial. Timing of price reductions is also very crucial! Not reducing your price at the right time creates a situation known as "chasing the market", which is when you reduce to the wrong list price at the wrong time.
Example of Overpricing and "Chasing the Market":
January 2008: Listed your Home for Sale at $800,000 though you are advised that $775,000 would be a more accurate price, based on recent sales of similar Homes in your area. You decided to do this because you "want to see what happens" and "don't want to give my Home away."
Throughout the Listing: I am diligently marketing your Home for sale, keeping you updated with market reports, and have asked you to reduce your price as purchase prices are declining, but you refuse.
April, 2008: Similar Homes around yours are receiving Offers and selling for $775,000 and less. Some of the Homes even have features that are superior to your Home's features. You're becoming dissatisfied because your Home is receiving fewer showings from Agents and Buyers and you haven't received any Offers. You decide to reduce to $775,000. However, with declining prices and market conditions worsening for Sellers, your $775,000 reduction isn't really a reduction at all. $775,000 is simply the price you should have listed at 3 months ago.
July, 2008: Homes are now selling for $750,000 and less. Your Home is still listed at $775,000 and a price reduction is necessary, but you're not moving from your price.
October, 2008: Clock is ticking...prices are falling...you're still listed at $775,000, the price you should have listed at 9 months ago.
December, 2008: Finally, a Buyer falls in love with your Home and places an Offer of $725,000. Though you're disappointed, you decide that you just want to sell, so you accept the $725,000 Offer. It's now been 12 months since you listed and, unfortunately, you lost out on as much as $50,000 profit because you refused to list at an accurate price. However, all parties are fairly satisfied as the Buyer has the Home of their dreams, you sold your Home, and I was successful with helping you market and sell it.
Alternate ending: An Offer was never placed for your Home, you decided to remove it from the Market, and said that you'll list it again later in the future. By refusing to price accurately, your Home was not as competitive as it could have been and potential Buyers were lost. We didn't achieve the desired result and I lost the time and money invested in marketing your Home for sale. I don't just stick your house in the MLS and forget it. View my Marketing Plan for your Home.
Obviously, there are no guarantees that your Home will sell at all, however, accurate pricing makes your Home more competitive and increases the possibility that it will sell.
Overpricing is also dangerous in the following ways:
Example of Overpricing and "Chasing the Market":
January 2008: Listed your Home for Sale at $800,000 though you are advised that $775,000 would be a more accurate price, based on recent sales of similar Homes in your area. You decided to do this because you "want to see what happens" and "don't want to give my Home away."
Throughout the Listing: I am diligently marketing your Home for sale, keeping you updated with market reports, and have asked you to reduce your price as purchase prices are declining, but you refuse.
April, 2008: Similar Homes around yours are receiving Offers and selling for $775,000 and less. Some of the Homes even have features that are superior to your Home's features. You're becoming dissatisfied because your Home is receiving fewer showings from Agents and Buyers and you haven't received any Offers. You decide to reduce to $775,000. However, with declining prices and market conditions worsening for Sellers, your $775,000 reduction isn't really a reduction at all. $775,000 is simply the price you should have listed at 3 months ago.
July, 2008: Homes are now selling for $750,000 and less. Your Home is still listed at $775,000 and a price reduction is necessary, but you're not moving from your price.
October, 2008: Clock is ticking...prices are falling...you're still listed at $775,000, the price you should have listed at 9 months ago.
December, 2008: Finally, a Buyer falls in love with your Home and places an Offer of $725,000. Though you're disappointed, you decide that you just want to sell, so you accept the $725,000 Offer. It's now been 12 months since you listed and, unfortunately, you lost out on as much as $50,000 profit because you refused to list at an accurate price. However, all parties are fairly satisfied as the Buyer has the Home of their dreams, you sold your Home, and I was successful with helping you market and sell it.
Alternate ending: An Offer was never placed for your Home, you decided to remove it from the Market, and said that you'll list it again later in the future. By refusing to price accurately, your Home was not as competitive as it could have been and potential Buyers were lost. We didn't achieve the desired result and I lost the time and money invested in marketing your Home for sale. I don't just stick your house in the MLS and forget it. View my Marketing Plan for your Home.
Obviously, there are no guarantees that your Home will sell at all, however, accurate pricing makes your Home more competitive and increases the possibility that it will sell.
Overpricing is also dangerous in the following ways:
- Limits buyers. Potential buyers may not view your home because it appears to be out of their buying range.
- Limits showings. Other Agents will be reluctant to view your home and, instead, will take their Buyers to view the homes that are priced correctly. When many homes are available that are priced correctly, they have no need to view your overpriced home and enter negotiations with you to lower the price to a fair market price (place yourself in the Buyer's shoes for a moment and think about this). We're no longer in a Seller's Market where there's a shortage of available homes. In Broward County alone, there are over 15,000 Single Family Homes for Sale and over 20,000 Townhouses, Condos, and Coops for Buyers to choose from, so Buyers have many choices (though some Buyers' choices are limited when they have narrow search criteria--inventory is lower than others in some segments of the market). View my Broward Real Estate Market Report.
- Before a Buyer's Agent submits an Offer on your home, they will research recent Sales of comparable homes in your area and will not be willing to offer more than a fair market price, so if you're overpriced, this means you're more likely not to get any Offers at all since many correctly priced homes are available.
- Extended stay on the market. When a home is on the market too long, it may be perceived as defective. Buyers may wonder, "what's wrong", or "why hasn't this sold?"
- An Appraisal is required to finance a home. Did you know that when you've accepted a Contract on the Pending Sale of your home, the Buyer's Lender will require an Appraisal? Along with other items, the Appraiser uses recent sales of comparable homes in your area in order to determine its Appraisal value. If your home is overpriced, it will Appraise at an amount less than your listed price and you will have to lower your price if you expect to sell your home.
If you absolutely must sell, then feel free to contact me regarding marketing your Home for sale.