Are you considering buying or selling a home? Today we're talking about listing price versus selling price and how that affects your pocketbook! There are many details to deciding on a price to sell your home at as well as what offer to make on a house. Real estate agents are experienced to help you through this process. Let's find out the details to consider on either end!
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Listing Price
Sellers have a listing price and their goals are to sell it at the best price, in the quickest time and at the least inconvenience to them. So how do we do that?
First of all we need to take those three things and figure out which one's your priority. Do you want to sell the fastest? Because most likely you're going to have to negotiate on the other areas. Do you want to sell with the best price? If you want the best price you might have to have your home on the market longer or you have may have more showings so that it would be more inconvenient to you. Or if you want it to be only shown at certain times of day and certain days of the week so it's not inconvenient to you, then you might not get as many showings. So, you're going to have less of a price or less quickly will the property be sold. This helps us determine the listing price.
You also need to consider what the market is doing right now. Is this a seller's market or is it a buyer's market? Is it a balanced market? If it's a seller market, you're going to be able to put your house higher. If it's a buyer's market, then you're probably going to have to put it lower. And you're going to have to realize that it might be on the market longer or shorter depending on which one it is.
You also need to evaluate how much competition there is. A lot of houses on the market? Is there only a couple that are like yours that someone will be looking at? You also need to consider the property condition. Is your house move in ready? Does it need a few repairs? Does it need a lot of repairs? Does it have a renter in it? All of those are important to evaluate when you're considering what listing price to put your property at.
Lots of sellers want to list their price low because they think it will get the most views right away and they'll get the house sold quickly. In essence, that is the way that it usually goes! A buyer does want a value so they're willing to look at houses that are lower priced. However, when the house is lower priced, they may wonder what is wrong with it? This may cause them not to even go look at it if they don't want a fixer upper, so they won't even go look at a lower priced house. Do keep that in mind when you want to price your house low for the market.
Many sellers want to list their house high so that they can get the best value. This may make your home be on the market longer because it'll take more buyers to see the home to see the value in it. Many times, the reason a seller wants to list their house high is because they have a personal connection to it. They lived in it; their children grew up there. They have many memories, so they have a personal tie to the home, and it actually does have more of a value to them. For some reason they're moving so therefore they need to consider these feelings when they evaluate the property's value.
Another reason to list a house high is to have negotiating room since everybody wants to get a value and buyers like to negotiate. They like to know they're not just given whatever you ask for. I recommend against this - I recommend listing the property at the price that you're willing to take and not allow for room for negotiations rather than list than allow for it. Everyone knows what price you'll take and you're still putting it out there at the price you're willing to take. You don't have to wonder if you're missing somebody in the market.
Another thing to consider with listing price vs selling price is the demand and timing of the seasons. In the winter and fall, the demand is going to be lower than the spring or the summer. Interest rates are very important to consider. A buyer is going to be able to buy less home when the interest rates are up. Right now interest rates are hovering just below six percent with the recent increases and still low for a long time period, compared to 12% of the'80's. It's a little bit higher than it was last year when there was a lot of selling going on so there is less home a buyer can buy right now. Seller's need to consider this when listing their home since less buyers are going to get qualified for the price you are asking. Consider the economy as well: are there jobs in your area? will buyers be able to come here and find work to do? Or are there professions they can find ways to work and pay for their home once they're here?
All of those are considerations when deciding on a listing price versus a selling price. Instead of going low or high the best place is to go realistic, right in the middle. Most buyers purchase at or below market values so if you want to attract the most potential buyers you need to price your house right the first time. You'll get more looks, more offers and it'll be sold quicker. It's important to accentuate the features and amenities that affect your property's value so they can see that it's worth the price that you've listed it. Make sure your realtor evaluates the market at the right price the first time.
Selling Price
A selling price deals with the buyer but the sellers still involved since they have to agree. Offering the listing price on a property may not necessarily get your offer accepted because there's many parts of an offer other than just the price. You may ask for a survey, inspection, home warranty, a termite policy. You may ask for the seller to pay your closing costs or other terms in the offer like early occupancy. All of those need to be evaluated when making an offer. When you're in a multiple offer situation you want to make your offer stand out from everyone else's and make sure your offer gets accepted.
How do you do this? What should you offer if the list price isn't the place to start well? I recommend that you start with realtor.com just as a reference point. Websites don't take into consideration things like the location, view, they may not realize all the repairs that are needed, or smells like mold or animals! You really need to talk to your real estate agent to have them evaluate the market, do a market analysis. They will look at houses sold and active on the market to see how much the property is worth.
It is important to know how much supply there is. Is there a lot of houses for sale? Is there a lot of houses nearby or is this neighborhood a special neighborhood? Is this house everything that you wanted? Does it check all the boxes on your needs and wants? What else are you going put in the offer? Before you decide on the price think of all the things you're going to ask for: are you going to ask the seller to pay for a survey? Are you going to ask for repairs or are you going to make them yourselves? Are you going to ask for a termite policy? Are you going to ask for early occupancy? Are you going to offer the seller delayed occupancy and let them stay in the home after you buy it? All of those are things to be considered when making the offer price because all of them take away and maybe give to the actual value of your offer. Of course, it's important to consider how much you can actually afford- what is in your budget and what you think the house is worth? But if you're getting a mortgage, it's also going to be up to the appraiser.
An appraisal should be objective and have fine lines about what it compares to other similar homes but oftentimes an appraisal is subjective, and it can matter on which appraiser you get to appraise your property. An appraiser will look at many of the similar things that we've also mentioned on the MLS and other properties that have sold and are on the market or accurate comparison to give an accurate value. They're also going to look at the features and amenities that your property offers that maybe these other properties don't have like a garage or carport or basement. It's going to look at the age, the square footage of the homes. It's possible the property could be over improved or underimproved compared to the other houses in the neighborhood. The appraiser decides the value that the mortgage company is willing to lend on and sometimes it come in too low.
If the appraisal is finished but it came in too low that's a problem. You're going to have to get your appraisal up, get the seller to agree pay for it out of pocket, have a reappraisal or pay the difference in cash. A lender will not close on a loan for a value that's not at or above the offering price, so you have to either renegotiate with the seller and get them to agree to accept their appraisal price and come down. If the second one doesn't come in at offer price, the seller won't negotiate or you don't have money to pay out of pocket, you still have the opportunity to get out of the contract and terminate if the appraisal is not enough. It's really in the seller's best interest to agree to negotiation because more than likely other buyers will ask why the offer fell through.
What if you're buying cash? Well, that's great - you can pay whatever you want, and you don't have to worry about what the appraisal says. It's just whatever you think the property is worth and the seller is willing to agree to. Keep in mind a property has many other values other than listing price versus selling price. There's also values to the lender, the appraiser, the tax assessor, the insurance provider, and emotional value.
Today we talked about listing price versus selling price and what those values mean to a buyer and seller and how they affect your bottom line. It can be difficult to decide a value whether selling or buying, so rely on the professionals to walk you through it! If you are considering selling your home, check out this download "7 mistakes a first time seller makes." Thanks spending time with me and hope to see you again soon.
