Your home’s value will be based on the sale price of similar homes purchased recently at the time you decide to sell, regardless of season. The bottom line is that you decide the asking price of your home, either by yourself or with the help of a real estate professional. How do you decide? What is the best way to get online exposure? Do professional photographs make a difference to online shoppers? What more can be done to market your home? Upcoming chapters answer these questions to help you sell your home for the best possible price.
THE PRICE IS RIGHT
A buyer of real estate is no different from a buyer of a painting or a bag of oranges. Both sellers’ and buyers’ perception of value will always have a prominent role during the sale. Perceived value and market value are not the same. You need to know how to price your home strategically and correctly from the get-go to obtain the best price.As a seller, keep two things at the forefront of your mind, as you determine listing price. First, sentimentality has no dollar value. Although you have emotional connections to your home, the buyer does not. Most buyers being shown many properties do not expect yours to be “the one.” You will have to work to get them to that decision. Avoid letting sentiment play a part in pricing the property. Set all emotions aside during the selling process. Buyers look for cues to figure out your motivation to sell. Next, there is also no direct dollar-for-dollar correlation between upgrade investment and market price. As previously noted, a $25,000 kitchen renovation will not bring the market price of a $275,000 home to $300,000. Don’t assume you can add that amount to your asking price and get trapped by making your home the nicest, but also priciest, home for your area.
SALE PRICE VS. MARKET VALUE
If you have a ready-to-buy, bank-qualified buyer who is willing to pay a price you will accept, that is referred to as “sale price.” It is an objective fact without influence. This sale price transaction, once complete, will influence the market value of homes in the area. You determine the price of your home by looking at comparable local sales provided by a professional real estate agent, your property’s condition, and the current supply and demand. What a piece of property might sell for based on features and benefits in a competitive market, and the current supply and demand of similar homes is its market value. You might value your home at a higher price than what a buyer will pay, or its true market price. Balanced markets will equalize market price and market value. The perspectives of buyers and sellers also come into play when placing value on a home. Let’s say your home has an abundance of mature trees — a plus in your mind. But a buyer who loathes raking leaves will see that as a negative. If you just spent $10,000 to replace your roof, you might think you can set a higher price, but buyers already expect the roof to be in excellent shape. Proximities to schools, bus routes, and medical facilities can create value that certain buyers are willing to pay for. Buyers look for the right deal, but what they are willing to pay, or what the bank is willing to finance, has limits. Strategic pricing is your greatest tool when selling your home.
PRICING EXAMPLE
A homeowner decides to place his home on the market and must decide on an asking price. By rough estimate, the home’s market value falls between $290,000 and $300,000. Many homes are on the market. These are some pricing considerations and approaches to finding that “right price”:
- The “leave room for negotiation” approach. In this approach, the market value is “stretched,” say to $305,000. The price will not entice a buyer, but may make comparable homes more desirable. The home will most likely not sell quickly, or at that price.
- The “price it according to worth” approach. This approach sees the price set right between the market value benchmarks, at $295,000. Likely, home shoppers will lump the home with like-priced homes, knowing they can buy anytime for $295,000.
- The “underpricing generates interest” approach. Underpricing at $280,000 will motivate buyers and perhaps create a bidding war. But the goal of selling the home for more money is derailed.
THE COMPARATIVE MARKET ANALYSIS
When it comes to finding a buyer, pricing your home based off of comparable, real-priced sales is crucial to making the sale. The Comparative Market Analysis is imperative to pricing strategically. When you ask for one from a real estate professional, be sure to review the analysis, ask questions, and get explanations. If completed correctly, this comparison report not only gives you a great listing price, but also reduces the chance of your home being under-appraised. If you have a well-priced home, you should be showing within the first few days on the market. Offers should come within weeks.
PERCEIVED VALUE
If the perceived value of your home by a potential buyer is greater than the actual price, the more willing he is to buy. The urgency to buy disappears, the closer the price and perceived value are. This means marketing the home to match the buyer’s specific needs and desires. A real estate agent can help you know the buyer’s hot buttons, such that marketing and presentation can be tailored accordingly.
SELLING BY SHOWING OFF
Before the internet, cell phones, and social media, buyers looking at homes perused the local Multiple Listing Service (MLS) book filled with tiny, grainy images of homes. Photos of featured homes (paid-for ads) were larger and sometimes in color, but most were black-and-white, amateurish photos. The photo was insignificant compared to the information provided below it.Today, the reverse is true. Photographs have become the most effective bait to attract future homeowners. Recent studies show that 93% of buyers use online tools to shop for homes before contacting a real estate agent. They peruse the web, finding homes that appeal to them, and then contact a Realtor. Beautiful engaging, photos of homes, inside and out make the best first impressions. Online marketing through photographs is one of the most important ways to market your home. Listing photography is a great tool for showing off the best features of your home. Bright and colorful shots of welcoming spaces encourage buyers to imagine themselves comfortable and living happily in your home. By focusing on the unique aspects of your home — like large rooms with great views or amazing architectural features — you can generate genuine interest. Stage your home to give the appearance of space and light in every photo without distorting reality.
MAXIMUM TARGETED EXPOSURE
When you hire an agent, they can place your listing on all major real estate portals, such as Zillow and Realtor.com. Buyers flock to these websites to find new listings. The agent can also place your home on their own dedicated website and their social media outlets. In the average month, Zillow alone captures 29% of traffic to real estate websites. When you choose an agent to sell your home, make sure they offer the maximum targeted exposure to potential buyers through the online marketplace. Check to see if they are current with all techniques for online marketing and can provide the advanced technical services to sell your home:
- Visual maps, such as Google Earth
- Floor plans or 3-D floor plans
- Video tours
- Updates on buyer activity through the agency
- Electronic documents
- Agency mobile device app
- Social media exposure
- Virtual home staging (if your home is empty)
Selling a home quickly and for more money takes work. Ensure the home is properly staged and ready to sell. Take advantage of every tool to achieve results. Work with a real estate agent who not only knows the value of good photography, but who can also provide an aggressive internet marketing campaign to bring ready buyers to your listing.