Regardless of what you paid for your house, regardless of what you think your house is worth, and regardless of what other homes for sale are priced at, the value is determined by the buyer.   Buyers devote considerable effort in finding the best house at the lowest price, that is finding the best value.  Every buyer who looks at your house is comparing your home's value with that of others they've seen.

If you live in a subdivision or area where the houses are relatively homogeneous (e.g. a condo building or area where most of the homes were built at the same time by the same builder) pricing is pretty straightforward. You can expect that your home will sell pretty close to the price received by your neighbors who sold recently -- adjusted of course for upgrades, differences in lot quality, location, and so on. However, if you live in an area where the homes are relatively heterogeneous (e.g. each home is relatively unique) or where homes have not been sold or listed on the market for some time, then pricing becomes more complicated. This is where a professional real estate agent can really help. A well-trained agent is always in touch with market trends and has access to all of the recent home sale transactions in your area.   Equipped with this knowledge and data they will prepare an informative comparative market analysis (CMA) report for you. Using the CMA you can price your home properly to maximize the money you receive from the sale of your home.

Listed below are the factors considered by Certified Residential Sales specialists in helping you establish a price for your home:

What affects your asking price?

• How quickly you must sell (A quick sale may require aggressive pricing)
• Competition (Are there few or many homes available similar to yours?)
• Available financing (Is your loan assumable at a below-market rate?  What are current interest rates? What financing alternatives -- Conventional, FHA, and VA -- are available for your area?)
• CMA or appraisal (Do you know what similar homes in the area sold for within the last six months?)
• Your selling costs.

What doesn't affect your asking price?

• Your original cost (Price is determined by today's market -- the economic conditions of supply and demand.)
• Your investment in improvements (Potential buyers may not appreciate the imported silk paisley wallpaper in the dining room.  In fact, some may adjust their offer by the cost to remove and replace it.)
• The cost to build your home today (Replacement Cost is only considered for insurance purposes, not for pricing a home.)
• Your personal attachment your home (Prudent buyers buy on their emotions, not on yours.)
• What the "Joneses" sold for (Regardless of what the Joneses sold their house for, every house is a little different, every buyer and seller is a little different, and every transaction is a little different.  And people tend to exaggerate what they really paid or received for something.)

What happens to the overpriced house?

• Helps to sell the competition (Most buyers are competitive shoppers.)
• On the market a long time (Studies show that 80% of your potential buyers see the house in the first 4-6 weeks.  If you don't sell then it takes about 3 months to replace them with an equal number of newcomers.)
• Loss of market interest and qualified buyers (Buyers use value, quality and price of similar properties as deciding factors.)
• Negative impression is created (People wonder why the house is still on the market.   They believe something must be wrong with it.)
• Seller continues to lose money (As long as your home is on the market you must continue to make mortgage payments and pay to maintain the property.)
• Seller accepts less money (Studies show that the longer a house is on the market, the greater the discount off list price is ultimately given.)
• Appraisal problems (Even if you find someone who is willing to pay your inflated price, you still may not be able to sell the house because the lender must agree that the home is worth the asking price or they won't lend money to the buyer.)

Again, a well-trained real estate agent will help you avoid the pitfalls of an overpriced listing and help you get the most money possible for your home in the shortest possible time, with the least amount of inconvenience.

Bill Smith, REALTOR®
(702) 273-8705