How does a Real Estate Agent set my home asking price?
Finding the perfect price for your home isn’t magic, but does take experience and knowledge that an agent is the person you want trust to do so. It is important to set the right price not only so you can get the most out of your home sale, but that an appraiser will asses your home as the same or lower price than selling for.
A good place to start is to consider the idea that there is no single list price. Different brokers, with different perspectives, may well suggest different values. The important issue for property owners is to understand why a broker suggests a particular price. Brokers will make a listing presentation in which they give owners a Comparative Market Analysis or CMA. The CMA will outline the proposed sale price, the reason for it, and include a marketing plan explaining how the broker expects to sell the property.
Brokers do not want to overprice the property, because that will drive away potential buyers and cause the property to stagnate. Sometimes owners want a higher value because they see the list price as a reflection of their importance. As a result, setting a sales price involves an understanding of more than bricks and mortar.
Homes reflect who we are, and have much to do with ego, status, pride, image, and a lot of subjective qualities. For such reasons, the seller may want a certain price for the property. It is not that the property is worth the seller’s value, but that a neighbor or competitor got that price.
The price must be right not only in the sense of attracting purchasers, but also as the sale progresses. For instance, lenders will finance a property based on the sale price or the appraised value, whichever is less.
A sale price which is too high can lead to problems. It may require the buyer to come up with more cash or the seller to accept a reduction. Or both.
For residential real estate, the usual process is to look at nearby homes now on the market or which have recently sold. Looking at comparables seems easy but it is more involved than meets the eye. A property with good landscaping is easier to sell than one without. Appearances count.
Modernized homes are typically more valuable than those in original condition. They may offer lower utility and operating costs.
Brokers want potential buyers to see themselves in the house. Garish colors and strange furnishings do not help.
Condition is crucial. Homes where the owners have invested in maintenance, paint and upkeep are easier to sell. And price.