Pricing Homes Correctly

SELLING YOUR SAN DIEGO HOME? Pricing It Correctly Isn't Important - It's Critical!

Pacific Beach Real Estate, Mission Beach Real Estate, San Diego County Real Estate

Okay, you've decided it's time to move on. Your house is too small, the kids have grown and you're going to downsize or you've decided to retire and join your grown children and grandchildren in a distant locale. Whatever your reason for selling, the absolute key to selling your San Diego home within a reasonable amount of time could very well be the price tag you hang on it -- whether you're in a buyer's market or a seller's market and whether you use a San Diego REALTOR or try and sell it yourself. Setting the correct asking (listing) price is the most critical step in the process of selling your home. Homes that are overpriced don't sell they scare away potential buyers. Home buyers and their agents look at houses in ranges (e.g., "$500K but less than $700K"). Set a price that's one dollar too high and your home may not even come up on the agent´s radar screen when he enters the MLS with the maximum price for his/her buyer. Even if it does come up, if your home is not priced appropriately when compared with other similar homes in the area, buyers will conclude that your house is too steep for their wallet and they won't bother to take a tour. This is especially true today here in the San Diego area where there are lots of homes on the market from which to choose. Yes, buyers are immersed in the market. They've seen lots of properties and they (and their agents) no doubt know the reasonable price ranges for properties they could be interested in. So, if your home selling strategy is to set an unrealistically high price in hopes that someone will bite or that your home´s value will, over time, "creep" toward the high price you have set, rethink your strategy. The market today as I write this article is vastly different than it was during the first half of 2004. Yet, some sellers are still of the same mindset pervasive one year ago which was "throw out a price and it may well stick!" If you are, then consider that in April 2004 there were approximately 3,200 San Diego County homes for sale. Today, there are approximately 11,000. And the number of buyers is certainly not greater today than it was a year ago. Enough said! Overpriced homes will generate no interest, no showings, no offers, no negotiations, and no sale. Instead, what an overpriced home will do is drive potential buyers into the arms of the competition -- other, similar houses that are on the market at more realistic (market value) prices. Of course this means that your property could sit unsold for a long period of time. OK, you say that you are not in a huge rush and are willing to wait it out. Well, sorry but, think again. Homes that remain on the market too long become "shopworn," leading agents and buyers to conclude that something either must be wrong with the property or that it is grossly overpriced. Again, consider that setting too high a price not only discourages showings but also tends to eliminate the most likely buyers from viewing the home. The fact is that brand new listings generate the most interest in the very first days the home is on the market. Properly marketed, it is exciting, it´s shown more and importantly, sells for a higher price. And, here´s the last fact I will throw at you... 90% of all showings are accomplished in the first 30 days of a property´s entry into the market. So, if the home is unreasonably priced for the entire first month, you have just succeeded in turning away 9 out of every 10 potential purchasers. Yikes! Plus, the home would have sold closer to asking price within this same period because after 30 days, the difference between asking price and selling price increases dramatically. The end result? Over-reaching in price from the get-go is typically counterproductive. It will take longer to sell and when it does, you may well end up selling for less than if it were priced correctly from the beginning. Of course, I don´t want you to ever get the impression that I am proposing you set your price too low. The last thing I would ever suggest is for you to leave a pile of money on the table and you should be very careful not to be one of those classic cases wherein your home sells for less than market value. Yes, if you price the home correctly, it should yield market value and sell quickly regardless of market conditions. So, how can you figure out the right asking price? Fortunately, there are resources available to you that will help you determine the fair market value (FMV) of your home, which is what a buyer is willing to pay you and you, the seller, are willing to accept. One of them is a comparative market analysis or what we simply refer to as a CMA. It´s a written analysis that compares your house to others like it in your area that recently sold, are now in escrow, or those which are now available (on the market). An experienced and conscientious Realtor who is truly interested in providing you with the most accurate estimate of market value will conduct an in-depth study of your home and the homes he will use as "comparables". While not all inclusive, he should study and evaluate your home´s value vs the comparables in the following areas: Location; interior and exterior square footage; number of bedrooms and baths; any views; parking (# of garage spaces and/or on or off street parking); overall condition/deferred maintenance; any remodeling; amenities such as pool, spa, fireplace, air conditioning, decks, patios, etc.; location of the laundry; landscaping; exterior noise; street appeal; proximity to community services, transportation or the beach; etc., etc. Your Realtor should then be able to assign dollar value differences to each of these factors and then either add or subtract value to each of the comparable properties in order to accurately determine the market value of your home. He should also take into consideration any market appreciation which has occurred between the time the comparables sold or went into escrow and the timeframe in which your property may enter the market. All of that said, to determine market value which is highly accurate is not a one hour deal and one needs to have the proper investigative tools, training and experience. It is a very detailed process which should, if done correctly, consume several hours of field work and research of the MLS and local tax records. How hard is it to get a comparative market analysis (CMA) for your home? It´s not. All you have to do is call a real estate agent, even if you are planning to sell your home on your own. The agent will happily come to your home and generate a comparative market analysis and suggested listing price for you in the hopes of eventually getting the listing. Of course, with literally thousands of agents here in San Diego County alone, how do you identify those agents who are MOST qualified to assist you? Certainly a great referral from a family member, friend, or if relocating from to the area, a referral from your home town agent, is a good place to start. Also, a few calls to a prospective agent´s past clients will help. And, you should always have at your disposal a list of pertinent questions which any reputable, experienced and well prepared agent should be ready to answer. If you do not have the newsletter, send me an E-Mail message and I will be happy to mail you a copy. Whatever you do, do get your CMA from a Realtor who is also a Certified Residential Specialist (CRS) and do not get it from your uncle's golf buddy who sells real estate across town.

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