Today we're going to discuss how to properly price a home to sell quickly, for top-dollar.
What are the factors that go into properly pricing a home?
Well, current market conditions show that inventory levels are at "one and a half months". What that really means is that if no other properties were to sell, or if nothing were to hit the market from today on, it would only take about one and a half months for all the properties to be sold and off the market. Gone.
What Do Low Levels of Inventory Mean In Real Estate?
Low levels of inventory creates pressure in the market, typically forcing buyers to pay a premium. This is also known as a "Seller's Market" because sellers have the advantage. Why? Let's say there are thirty people looking at the only home available. It's almost guaranteed that the winning buyer is going to pay a premium to out-bid the others.
Currently in this market, I'm communicating to my buyers that, it's important to find a specific amount you're really comfortable spending per month after speaking with your lender. Whether it's for a single family home, or a condo that includes monthly maintenance fees, be sure to consider all the costs.
When inventory is low, be prepared to shop for properties that are about 10% below what you're comfortable spending each month, and be prepared to pay about 5% above what you're comfortable spending.
How To Set A Good Asking Price
An asking price from a seller or homeowner is just that - an asking price. There could be homes that are valued at roughly $500,000, but a seller is asking $1,000,000.
On the other hand, there can be properties with a true market value of about $500,000, but the seller listed it for only $480,000. Buyers in the market will appreciate seeing the discounted price and almost always gravitate towards the better deal.
In fact, in situations like this, buyers can almost expect to pay more than the asking price. Why? Because it's not really worth $480,000, it's worth $500,000.
Moreover, if a property is listed with a below-market asking price, and if it's nicely staged, is clean, and the photos look nice, more people will have viewed it, this will typically drive the final sale price to above market value to $510,000 or even $520,000.
What this means is, it's best to rely on current market conditions and buyer trends to set the initial asking price for any property.
What If A Property Is Overpriced?
What happens when a seller wants to buck the market conditions and ask above what the market is valuing the property at?
The market will see this and know that it's not a good option. It will almost say, "This person is crazy".
If no other comparable homes are selling for that much, the market will respond in kind. Buyers won't even want to submit offers because they know the property is a bad deal, and the seller will most likely be unreasonable during negotiations.
The overall market knows the true value of homes because it's represented by licensed agents and brokers with everyone's best interests at heart.
Moreover, those realtors can see what's happening in the market, and properly guide sellers to a reasonable price.
How To Spot Good Deals
I always tell my clients that if you want to get a really good deal on the market, look for the ones that aren't showing well in pictures, and for other factors, such as the ones that don't have the best lighting.
I love, love when sellers overprice a home when I represent the a potential buyer. Why? They've high price has already scared off 95% of my competition.
That means when I go to submit an offer, I've almost been given a gift - leverage for my client.
It's interesting when you think about purchasing a property and all the different options that it gives you. It's extremely important to know and consider all the factors mentioned above beforehand when pricing a home to sell.
That's my advice - get a clear picture beforehand. Get as much information as you can to determine what the true market value is, and what's best for you as the Seller.
Pricing can vary, but having the facts ahead of time will help you hit your goal of selling quickly, and for top-dollar with an amount that everyone is happy with at the end of the day.
If you have any questions on what your property's fair market value is, send my team and me an email or call us direct at: (808) 265-3906 for a free estimate based on the current market conditions.
Until next time!