A house that is priced 10% over its actual market value is many times less likely to sell in the initial 30 days of marketing than one priced within 5% of its true value. Not only will an over-priced home take longer to sell, it is also likely to sell for less than it’s actual value. This is due to the “discount” often associated with properties that have been on the market for a longer than average time.
It should be pointed out that recommended listing prices are based on historical sales and current market conditions. It is always difficult to walk the fine line between getting the most for a property while at the same time ensuring your asking price is competitive enough to attract serious offers.
How you feel about testing the market will determine how much higher than the current selling prices of similar properties you’ll wish to ask for your home. You can always start at a higher price than the market is currently bearing and then, if necessary, reduce your price at a future date. The drawback to this is that it could take longer than normal to sell and you could end up helping to sell other similar homes as they may look comparably less expensive than yours.
This is where the experience and knowledge of a good REALTOR ® is invaluable. REALTORS ® spend a lot of time and energy making sure they know their local market inside and out. They keep their finger on the pulse of the market and have the resources, connections and ability to keep you up-to-date with its constant changes. They know all of the properties currently for sale in your area and are literally your best resource for determining and getting the highest price possible.
- availability of community amenities, such as public transportation, parks, stores, churches and schools
- quality and consistency of neighborhood planning
- future development plans and local zoning
- style, layout, size, age and quality of construction of the building
- size, shape, privacy and landscaping of the yard
Condition of the home
- first appearances
- floor layout
- quality and appearance of fixtures
- general overall condition of main systems (such as roof, furnace, electrical system, central air, etc.)
- the asking and selling prices of comparable neighboring homes
- The best way of establishing an accurate range of value for your property is to have your REALTOR ® prepare a Comparative Market Analysis (CMA). This will give you a detailed and accurate overview of the current market.
Market conditions and the economy
- number of homes currently on the market
- number of people looking to buy
- the state of the local and national economy
- current mortgage rates
No matter the condition or desirability of your home, its value will be affected by current market conditions. Here are the various conditions you may encounter and how they will affect you.
The number of homes on the market is equal to the number of buyers (supply equals demand). In this market, prices are stable and homes sell within a reasonable period of time. It is a calm atmosphere with buyers having a satisfactory number of homes from which to choose.
The number of buyers exceeds the number of homes on the market (demand greater than supply). In this market prices are increasing and homes sell quickly. As a seller you will probably have more negotiating power and obtain a higher selling price for your property. Unfortunately, you will be on the other side of the fence when purchasing your next home.
The supply of homes exceeds the number of buyers (supply greater than demand). In this market prices tend to drop and the homes stay on the market longer. Thus your home may take longer to sell and you will have less negotiating power in terms of the selling price. Fortunately, you will be in the driver’s seat when making an offer on your next home.
When you understand current market conditions, you are better able to position yourself as a Seller. It helps to know if you are in a Seller’s, Buyer’s or Balanced market when setting your asking price. In a Seller’s market, there is little competition and you may ask for and achieve a slightly higher price than you anticipated. In a Buyer’s market, there is a lot more competition and Buyers have plenty of choices and room to negotiate, forcing you to be very competitive when setting your price. In a Balanced market, you will have a fair number of showings and sell in a reasonable amount of time if properly priced.