In a recent article we addressed selling your home as we discussed the need to price it right. This time, let's get down to the nitty-gritty of pricing for sale.
Proceeding with the understanding that a family's home is often their largest investment, the subject of price quickly becomes a sensitive one. Nevertheless, the adage that it is 'worth what the market will bear' rings true every time.
Even so, buyers may be willing to pay even more for your home than a bank appraisal will allow. While there are several basic ways to appraise a property, the most commonly used approach in 1-4 unit residential property is by comparing recent sales of like homes in close proximity to your home.
In other words, the lender wants to know what similar properties within, say, a mile from yours sold for within the last 3 months or so. This presents a number of challenges to the seller and their agent. Why? Well, if you are not in a large tract of 15-year-old (or less) homes there simply may be no properties to compare, much less recently-sold ones.
Back in 2007 I sold a property on the Sacramento River. It was a glorious custom estate home. The seller wanted $4M. The problem was that there were no comparable sales of this kind....anywhere. If anything, it might have appraised for $2.5M.
Long story short, a cash buyer came along who fell in love with the property. It sold for $3.7M. Here's why: Since it was an all-cash purchase no appraisal was needed.
So what about selling your home? There are some very creative strategies for pricing in today's market. A good Realtor should be able to advise you on that. If not, move on to the next until you are satisfied that they can actually sell your home. A qualified agent should be able to help you arrive at the current market value of your home in your neighborhood by producing a "Comparable Market Analysis."
If you want to get aggressive with your price, count on an aggressive sales plan to sell as well. Price is only part of a skillful plan to sell. If you wish to ask on the high side of the market, be prepared to validate that price by demonstrating the certain amenities that your home has over the next one. Also, be prepared to receive possible lower offers and know how you will respond.
Another approach is to ask just south of market price and be prepared for multiple offers. Sometimes this yields interesting results. I have even seen offers well over market value due to the auction-like frenzy that multiple players tend to generate.
Last but not least, be sure your agent is a skilled Negotiator. An agent who is worth their salt must do more than simply list your property for sale. They should seek to always be a part of the solution that gets a deal closed rather than impede it. The experienced agents reading this know exactly what I mean!
C.J. Lauria is a Real Estate Investor since 1988. He is also a Realtor, Author, Speaker, Educator and Director of Invesdoor® Real Estate in El Dorado Hills, CA.