At What Price Should I Sell?

This article is written to provide you with a look at a professional approach to pricing real estate and single family homes in the Apple Valley, Hesperia and Victorville CA real estate market.

Currently we are in a strong buyers market.  The bottom line is...If you don't have to sell at this time, stay out of the market.  An over abundance of homes for sale is making it a nightmare for sellers.  Only the most motivated sellers are selling.

Set Your Asking Price
Setting the price for your home involves evaluating a variety of market conditions and financial factors.

During this part of the home selling process, we will help you set your price based on:

Pricing considerations
Comparable sales
Market conditions
Offering incentives
Estimating net proceeds

Hopefully you have picked a Realtor that you can trust and has enough experience to guide you through this critical part of the process.  If you have then please listen to them as they have your best interest in mind not just a quick sale.

Pricing considerations
In setting the price for your home, you should be aware of a buyer’s frame of mind and how they think. Consider the following pricing factors:

If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. In a slower market buyers tend to look at the lowest priced homes.

You may have told your REALTOR® to "Bring me any offer, I'll take less." But compared to other houses for sale, your home simply looks too expensive to be considered and may not even be shown by other Realtors®.  "Room to Negotiate"  in a slow market is not the sellers friend.  Remember you never have to take less than you are asking... an offer in your hand is better than nothing.

If you price too low, you'll leave money on the table and short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a mid price and waited for a buyer who was willing to pay it.

TIP: Never say "asking" price, which implies you don't expect to get it.

Using comparable sales
No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market. Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood like yours. We can furnish data on sales figures for those "comps", and analyze them for a suggested listing price. The decision about how much to ask, though, is always yours.  Keep in mind that closed sales represent what buyers where willing to pay and active listings for sale are your competition.

The list of comparable sales we brings to you, along with data about other houses in your neighborhood presently on the market, is used for a "Comparative Market Analysis (CMA)." To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices. This CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. In addition, an appraisal is done for a fee while the CMA is provided by us for free and may include properties currently listed for sale and those currently pending sale. In a normal home sale, a CMA, prepared by a knowledgeable Realtor® is probably enough to let you set a proper price.

A formal written appraisal (which may cost a several hundred dollars) can be useful if you have unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price, or if there is any other circumstance that makes it difficult to put a value on your home.

TIP: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report -- the kind that's complete with photos of the house and neighborhood, a map specifying the site, and floor plans is sufficient.

Consider market conditions
A Comparative Market Analysis (CMA) often includes Days on the Market (DOM) for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months. We can tell you whether your area is currently a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.  Be prepared in a slow market to wait it out.  If your agent tell you that the average days on the market are 90, be prepared to be one of those that may take longer.

Offering incentives
Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, we will sit down with you to work out a schedule in advance. If there haven't been many prospects viewing your home after three weeks, you may need to lower your price. If that doesn't bring any prospective buyers, you may need to lower your price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.

Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution. If you haven't had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be "to the broker who brings a successful offer before Christmas."  As a rule this is only necessary when you have a lot of competition in your immediate neighborhood and price range.

Estimating net proceeds
Once you’ve been given an estimate of market value, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful as you start looking for another home to buy. From the estimated sales price, subtract:

Payoff figure on your present loan
Broker's commission
Any prepayment penalty on your mortgage
Escrow and Title Fees
Inspections and miscellaneous costs
Unpaid property taxes

In addition, we will tell you whether local customs or rules dictate that the buyer or seller to pay for the following items:

Title insurance premium
Transfer taxes
Survey fees
Inspections and repairs for termites and the like
Recording fees
Homeowner Association transfer fees and document preparation
Home protection plan
Natural hazard disclosure report

As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. We will assist you in estimating what your final closing costs will be.

If you have questions regarding this article feel free to let us know.

7/05/2006