Monday September 17th, 2007 - 4:52:22 am
Posted by Sand Shell Realty
REALESTATE FACTS
OVERPRICING – ROAD TO REGRET
When it’s time to market your home, it’s very easy to get snared in the overpricing trap. After all, you want and deserve top dollar for your home, don’t you?
So, it’s logical that your asking price might end up higher than “ fair market value” Unfortunately, you probably won’t realize it’s too high, until much later when you may have missed the perfect buyer. Pricing and Appraisal are not science, but an art supported by facts of actual sales. It is not a matter of crunching numbers.
*Buyers are informed.
Part of the marketing process is taking into account the sophistication of today’s buyer who is informed by tons of internet data.
Buyers are exposed to tremendous detail, some accurate and some confusing. Buyers ultimately seek out a competent informed Realtor to filter the process to reality.
**Buyers expect more.
The other part of the marketing process is recognizing the expectations of informed buyers. Todays sophisticated buyers are financially pre qualified, with specific amenity expectations for their dollar investment they intend to make.
***Buyers don’t want to play poker, or get into emotional posturing games. They look for an informed agreement of satisfied seller and buyer.
Pitfalls to Avoid!
Here are just a few of the disappointments you may encounter with overpricing in the current market.
1. Response to your ad in news print or cyberspace media will be more likely be reduced since the comparing public recognizes over pricing. Remember,you compete. The average buyer is looking regionally, and buys by comparison. The days of floating prices, finally finding reality are over. As your price floats downward the buyers are drawn elsewhere to the best of values. Your property may become “price weary” . Sales history is replete with property that missed the market by overpricing.
2.The prospects who are attracted to your property may be the wrong ones? How so? They will be looking for the real dollar, the home priced as yours but with the amenities/features that your product does not have. Ladies remember how you felt when were looking for advertised silk only to find it was cheaper fabric. Gentleman, how about expecting steel tools and discovering pot metal instead? I have had more than one buyer look at price, drive to the home and say to me “you’ve got to be kidding”." Drive on".
3. Very few buyers will make an offer on an overpriced property. The reason? The days of nibbling down the price with five counters, ‘halfsy’ at a time is over. Even if you accept their lower offer the buyer may not be getting a bargain, since the final price is probably no less than “ fair market value”. To be honest the phrase “bring me an offer” will be interpreted by many as desperation. Proper pricing will avoid such.
4. The lending market today has changed. The emphasis is lending more on the value of the property than the ability of the buyer to pay. Interest rates are good, but the guidelines have tightened and your property may not appraise for your agreed price. Result? During the contracted discovery of 17-21 days, your property is effectively off market and you may miss the qualified buyer who bought the “fair market value” priced home. Todays buyers tend not to make up back up offers.
What to do?
Do set price based on the “fair market value” expectations of recent sales, the recent sales to asking price averages and the realistic days on market you expect based on current days on market of sales in your amenity/price range. It is not the over all days on market that count, but the days on market in your price/amenity range that counts. Days on market are dollars reduced from your sale price for payments, insurance, taxes and personal tension/wear and tear.
Don’t set your price on the highest price a neighbor, friend, family member or real estate agent suggests.
Don’t float a price expecting an uninformed offer, or asking price to come down gradually. Challenge the market with the best value for “fair market price”.
You will get your price and be on your way to the new horizons you desire. Remember the guy who sits at the bar over scotch and brags that he got “his price”, may have forgotten the ten months of payments, taxes, utilities he paid during the marketing must be deducted from “his price”.
Let alone he has forgotten that the horizon changes and the price choice of where he is going has changed during the time of his overpricing experience.
One of the values he miscalculated was the value of his time, energy and loss of getting on with his life. How much is his personal energy, inconvenience and time worth? All must be deducted from his" bragging price".
Pricing is an art not a science. Consult with your informed and qualified realtor.
Jim Silvers,
Sand Shell Realty
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Pricing Property 
