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Home Sellers - "Right" Pricing Your Home
By Nef Cortez
With the public perception of realtors and other players in the real estate
industry suffering under all the negative media coverage, it may be difficult to
believe that there are professional and ethical realtors in the marketplace. Rest
assured they are out there¡ªdoing their best to inform, educate and represent
their clients in the current real estate market.
One of the most important things they can do is to inform a home seller about
the pitfalls one is likely to encounter when they overprice their home. While
sellers have different motivations as to why they want to knowingly over price
their home, the following will explain why this is not always in the seller¡¯s best
interest.
#1 ¨C Decline in Agent Enthusiasm and Response
In order to satisfy their clients, Buyer¡¯s Agents (realtors that represent buyers)
will spend less time showing a property that is overpriced. Before showing the
house, most agents will evaluate the house¡¯s data on the MLS (Multiple Listing
Service) database. Based on the comparative market analysis that their
research shows, they will know definitively that the house is overpriced. If their
client insists on seeing the house, they are very like to briefly show the home to
their clients but they will include other properties that are appropriately priced
homes in their client¡¯s desired neighborhood. As the old adage goes ¡°Time is
Money¡±, buyer¡¯s agents are motivated to get the most money for the time they
spend showing houses. They know that satisfied clients will very likely refer
them to additional business.
#2 ¨C Decline in Agent Showings
As mentioned previously, Buyer¡¯s agents (realtors that represent buyers) avoid
showing overpriced homes because the realtor has access to MLS (multiple
listing systems) databases that provide specific facts and accurate data about
market value. While they may visit the property themselves which is called
¡°evaluating the inventory¡± or houses available for sale currently in their market,
they may not even mention the property to their clients. In order to maintain
their credibility with their clients, they will steer their clients to more
appropriately priced homes with a realistic idea of their ability to close the deal.
#3 ¨C Minimizes Offers
Even if a buyer was persistent and interested enough to see your property(
because it happened to be in a neighborhood they like, etc.) they will be less
likely to make an offer since the difference between the list price and the market
value is substantial. A professional buyer¡¯s agent will inform his clients what the
market value of your house should be.
# 4 ¨C Qualified Buyer Exposure
Overpriced houses fail to attract qualified buyers for the reason stated above.
You are more likely to attract ¡°looky-loo¡± buyers who are usually ready to buy
six to nine months in the future. While these prospective buyers may be great
client leads for the agent, they do nothing for you¡ªthe seller.
Overpricing your home tends to drive away pre-qualified prospective buyers
from your home and thus the very kind of offers you would be inclined to work
with. With so much real estate data on the internet now available such as
Zillow.com, Realtor.com and other websites, savvy buyers can often
guesstimate how much your home should sell for and thus will make offers on
homes that sell at the estimated market value and within their price range.
# 5 ¨C Limits Financing
Financial institutions and mortgage companies finance only a percentage of the
real value of the house, which is called the loan-to-value( i.e. the percentage of
a property's value that a lender can or may loan to a borrower) and can be, for
illustration purposes, typically around 80%. If the house is overpriced, the
lender usually will finance a lower percentage, thus reducing the available
financing. If you have been lucky enough to get an inexperienced buyer to this
point, this is where the transaction can suffer problematic setbacks and
potentially ¡°fall out¡±¡ªthe transaction falls apart. If you are not a ¡°motivated¡±
seller, this may not be a problem other than a waste of your time. However, if
you were anxious to sell your home this is where overpricing your home can
become a disaster.
# 6 ¨C Wastes Advertising Dollars
A house that is unrealistically priced fails to get normal advertising response.
This reduces the effectiveness of advertising and results in the loss of advertising
dollars.
# 7 ¨C Loses Prospects From Signs
Prospective buyers who learn about the house from the sign usually will inquire
with the listing office or realtor regarding the price. They usually get turned off if
it is overpriced and do not pursue the matter further¡ªnot even to see the
interior of the house.
#8 ¨C Less Money For The Seller
Eventually market interest in the overpriced property completely declines and
the seller may become desperate and often begins to cut the sales price
drastically. In the interim, he or she must bear maintenance and holding costs.
The net result is that the seller will get much less than he could have if the house
was ¡°right¡± priced or correctly priced at the outset.
for mroe information visit http://www.nefcortez.com
About the Author
Nef Cortez has been a licensed real estate broker and has held various positions in the mortgage and real estate industry for over 25+ years. Visit his website at Real Estate In Chino Hills CA for information on foreclosures.
Article Source: http://www.simplysearch4it.com/article/51595.html
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| Some other articles by Nef Cortez | |
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