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Category: Articles » Finance » Real Estate » Article » Article Code

Home Sellers - "Right" Pricing Your Home

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 ... read more

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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

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