Real Estate 101 says that you have four factors to consider when selling your home: price, condition, terms, and location. You have no control whatsoever over the location. You do have control over the price, the condition, and the terms. When getting a house ready to put it onto the market you do want to get it into top-notch condition, particularly in this economy. A shabby or dirty house is hard to sell because the investors have taken a beating and aren’t flipping homes in great numbers, and owner-occupied buyers rarely want to take on projects. Terms can attract a buyer and involve you paying closing costs or perhaps even offering a private contract. This can save a buyer thousands of dollars and will certainly make your home more marketable and perhaps even get you a higher price. Having said that, in my opinion the queen who wears the crown in this group is price. Price appeals at every level. It corrects flaws that you can not change if you are in an undesirable location, it makes a fixer house attractive because it is a bargain, it appeals to buyers who would otherwise want terms because it is an obvious value, and it gets your home attention across the entire market. It will make your home sell.
I am not advocating that you need to give your home away. I also realize that you can only sell within a range that you can afford. If your mortgage is greater than the current value, you need to do a shortsale to get it to be priced right to sell it. So, yes, price has its limitations. Do not get mixed up into this equation your need to pay off credit cards or take that luxury cruise you dream about. The value of your home has nothing to do with your credit card balances.
So how to price it?
First, don’t take it personally. The market sets the price and you don’t. Buyers are really, really smart. They shop and compare and figure out value. When you are priced right, they will see the value and they will make an offer. This is something you do have control over. You can work with your Realtor to do the same calculations in the current market to figure out your home’s value. Once you know that, please do not be offended.
Second, your home’s value is based upon closed sales and not active listings. When a home in your neighborhood is listed for sale you likely look it up on-line or pick up a flier from out front. You see the asking price and that tends to stick in your head. After the home sells there is not much advertising about what it actually closed for. You are not likely to know if the final price was less than the asking price or if the seller paid concessions such as closing costs. This means that when the Realtors you interview come to meet with you to discuss your home, you may have an inflated idea of what it is actually worth. Be prepared to learn what actual sales prices have been. It is these prices that you need to use to calculate the value of your home.
Third, avoid the temptation to tack on a few thousand dollars to “leave room for negotiating”. This is like tacking on 6 months to realize a lower final sales price. Seriously, in this market even a few thousand dollars extra will put buyers off. When your house seems like it is a higher price to other homes, why should buyers bother with it? And think about it: the houses that sold in your neighborhood also had to pay closing costs and do repairs to satisfy their buyers. No matter where you price it you will be negotiating. I do want to point out that a well priced home is more likely to sell quickly and at or near the asking price. When a buyer asks how long has it been on the market, and they hear just a week or so, they know that they can’t haggle you down because you aren’t ready for it. But when a house has been on the market in excess of 60-90 days, they know that they are going to go in low. So pricing it right will get you better offers, more quickly.
Last, pay attention to what the market tells you when you do list it. Are you getting showings? If you aren’t, you need to do something. I tell my sellers that it takes about 20 showings to get an offer. If you get only 1 showing in the first 30 days then you have got a long and slow road ahead. If you get 10 showings in the first month then you are going to get an offer in the next few weeks. That is how it works. It’s not rocket science. Don’t wait to make changes. Pay attention and be responsive. I also recommend that you be in communication with your Realtor to find out what they are hearing. They can get feed back after showings and also during the Realtor Broker’s Open House. They can then share with you what they are hearing. This can be helpful with correct pricing and also with finding flaws that you and your Realtor did not foresee, such as leaving a light on in a dark corner or re-arranging furniture.
There is a buyer for every house. Be smart. Be pro-active. Make the market work for you.
