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PRICE FACTS - The Importance of Proper Pricing

Here are reasons for pricing your property at the market value right from the start in order to net you the most amount of money in the shortest amount of time.

An overpriced property:

• Minimizes the number of Offers
• Nets Less for the Seller
• Lowers Agents Response
• Limits Qualified Buyers
• Lowers Showings
• Lowers Prospects
• Limits financing
• Wastes Advertising Dollars

The real estate market is ever changing and now more than ever buyers are educating themselves to the process. The "used car salesman" mentalities are no longer able to make a living in real estate, or if they are they may find that their days are numbered. Successful brokers are taking the role of educator and consultant. Consumers more than ever before are recognizing the importance of doing some homework before buying or selling any real estate. Because of this increase in buyer sophistication, it is becoming increasingly important for the seller to price their property correctly. Today's buyers are asking for a Comparative Market Analysis (CMA) and the real estate professionals are providing this kind of analysis as part of their standard of service. Previously, an agent might just quote what other properties were offered at in the neighborhood in which the buyer showed interest. This is in not generally indicative of fair market value. Market value is based upon what a willing buyer and seller have actually paid and received for a property. A CMA should reflect sales of like properties in the immediate area of the subject property within the last 6-8 months. Additional factors such as replaceability of property, uniqueness of location, proximity to amenities etc. should be factored in. However, the foundation of the Market Analysis is the comparable sale (like-properties in same area and their recent selling price).

Because of these factors and increased buyer sophistication, it is increasingly important for the seller to price property correctly. Property values are NOT dictated by what is invested in the property, what was previously paid, nor by what is "needed" to receive from the property. These factors are NOT applicable to setting a sales price.

It is the Realtor's job to tactfully prepare the seller for these facts and help them realize the importance of pricing the property at a market level. When priced accurately, many properties sell quite quickly because the first month on the market is typically the time of most activity for new listings. If those listings are priced at market, properly marketed, and prepared for showing, the likelihood of a quick sale is greatly increased. Many times sellers eventually lower their price to market after the best buyers have already dismissed the property as being overpriced, and the seller ends up expending more money and time because the property was not correctly priced immediately.

It is important for the seller to keep in mind that they are paying interest on a mortgage each month along with associated maintenance, insurance and property tax expenses. The carry costs will ultimately reduce the seller' net gain on the sale of the property. The seller may lose the opportunity to purchase another desired property if they must sell in order to buy. Even if no mortgage exists, the seller must consider that investment returns are foregone as long as the capital is tied up in the property. Oftentimes just the time and effort and inconvenience (especially if the property is the personal residence) involved in keeping a property "show ready" is enough to encourage a seller to set a price correctly