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Pricing
a home is far trickier than you might think. Real estate
professionals draw on science, experience and talent, to arrive at
the ideal price, one that leads to a fast sale and nets the most
proceeds for the seller.
Before
considering what factors influence price, let's look at the factors
that don't: You would never price a house based on what you paid for
it—whether you purchased it six months ago or 60 years ago. The
price you paid has no bearing on its current market value. Nor would
you solely base the price on improvements you've made. After all,
that "improved" kitchen or bathroom may not be to the
buyers' taste. They may discount the price to allow them to improve
upon your improvements. And what you need to clear on the sale has
no bearing on the asking price either. Even the assessed value isn't
always a reliable plumb line.
So
what does influence price? Think of housing as a commodity that
fluctuates according to the universal law of supply and demand: many
houses + few buyers = a drop in value; many buyers + few houses = an
increase in value. Then factor in the terms, creative financing (for
example, a low-rate assumable mortgage or take-back financing),
craftsmanship, amenities and condition. This brings us closer to the
true market value. A Realty Times article (Choosing the
Best List Price, August 25, 1998) describes pricing this way:
"[Price] is determined by the combination of the seller's
unique home and situation and the buyer's situation. In other words,
the market is created house by house." That is, what an
individual buyer is willing to pay and what a seller is willing to
accept.
Where
does this leave you? Generally, the best indication of what you can
get for your house comes from comparing it with similar houses in
the area that are currently listed, in contract or have sold within
the last six months. Evaluate your home against homes with common
features such as the number of bedrooms and bathrooms, the lot and
appeal of the location. Note the average list price, average sales
price, the percentage of listed homes that sell, the list to sales
price ratio and the average number of days on the market. A
comparable market analysis (CMA), prepared by your real estate
professional, usually includes this information. You may want to
attend local open houses, solicit a professional appraisal, and
conduct research online as well. Broadening your search for
objective information will ultimately result in a figure closest to
the ideal.
Don't
make the mistake of overpricing. This strategy may backfire by
resulting in decreased activity, fewer offers, a lengthy marketing
period, and lower net proceeds. You might even make the competition
look good.
By
setting a price that reflects market value, sellers can generally
benefit from a faster sale, increased interest from real estate
professionals, greater exposure, and a healthier return on
advertising. In addition, you may even receive higher offers that
will net you more than you had anticipated!
If you have questions about this or any other
home buying or selling subject, confer with the real estate
professionals who can help provide you with more detail…
We can
be reached at (310) 265-2130
Prudential California Realty is an independently owned and operated
member
|of The Prudential Real Estate Affiliates, Inc., a Prudential
Financial company.
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Opportunity
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