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The Truth About Pricing Real Estate
Excerpt from the best seller "The Truth About
Real Estate".
Proper Price Positioning is Paramount.
The Truth Is ... A real estate consultation is a report prepared
by a qualified real estate professional which sets forth an analysis
of facts and figures, available to the real estate community, to
aid the seller in making an intelligent decision regarding the pricing
of property.
The Truth Is ... Regardless of the reliability
of the data from which the appraised value is extracted, it is the
buyer who establishes the value of the property. Yet, selling property
is not enough. It must be sold with the other specific objectives
in mind such as price and time restrictions, and must enjoy proper
price positioning in the competitive marketplace.
The Truth Is ... Experimenting in the marketplace
with inflated and speculative pricing, theorizing that prices can
always be reduced, makes sense at first glance. However, this practice
can be counter productive as buyers are sophisticated, and will
select a property after exhaustive comparison shopping. Since buyers
are prone to shop in one range, they recognize value in the specific
price range more quickly.
The Truth Is ... The theory of introducing
a property at a high price and then waiting for a buyer to make
an offer is seldom appropriate. In fact, this thinking explains
why certain homes stay on the market for extended periods of time,
while many other competitively priced listing are sold in shorter
period of time.
The Truth Is ... An overpriced property is
less likely to be shown. However, if it is, regrettably it is shown
to make other appropriately priced listings more saleable.
The Truth Is ... If a home is priced even 10%
over the market value, this in some cases may seriously diminish
the number of people who will view the property. Today's increasingly
educated and technologically advanced buyers are extremely knowledgeable
regarding market value.
The Truth Is ... A real estate consultation
should be scheduled to help homeowners arrive at the highest realistic
price.
The Truth Is... Many sellers believe that setting
an aggressive price on their property is not a problem. If buyers
really like a home, they will make an offer.
The Truth Is... Real estate professionals have
a responsibility to assure the homeowners they represent that their
propriety is provided with positive shelf space as compared to the
other properties it is competing with.
The Truth Is ... Too high a price can actually
end up costing the seller money. A property that lingers on the
market may significantly weaken the negotiating position. In most
cases, buyers who observe a price reduction, or who note that a
property has remained on the market for an extended period of time,
usually expect the price to be reduced again. As the length of time
on the market increases, so does the difference between the asking
price and the listing price.
The Truth Is ... Sellers have frequently been
heard to say, "My neighbor, two doors away, has as a home just
like mine, and sold it for "x" amount of dollars. I have
an extra garage, half bath, etc.; therefore, I know I should get
"y" amount of dollars."
The Truth Is ... Comparable properties, especially
in the same neighborhood, are strong indicators of a value range.
However, over a short period of time, market condition can change
dramatically. More or less demand for the property at any given
time can significantly alter its value.
The Truth Is ... Sellers are usually not qualified
appraisers, as they understandably often misinterpret value, natural
tendency to view the value of a home aesthetically rather than objectively.
The Truth Is ... When an overpriced home lingers
on the market, it is important to objectively determine the contributing
factors as to why the home has not sold, therefore, immediately
eliminating any form of frustration for owners as well as real estate
professionals.
The Truth Is ... No two homes are exactly alike.
Adjustments must be made for difference in location, size, condition
age, etc. Sellers should be wary of anyone who volunteers price
opinions without both physically and thoroughly inspecting the home
in addition to analyzing the necessary data which will result in
a thorough real estate consultation.
The Truth Is ...Sellers very often need to
replace or repair roofs, furnaces and driveways, etc., at substantial
cost to them. Items such as these are considered routine maintenance
and seldom return their costs to the seller. The value of a home
is not based on the cost of construction; in other words, the cost
not necessarily indicative of value.
The Truth Is ... When price reductions become
necessary, this action is often viewed negatively by the client
because it suggests that something is being taken away. In fact,
a proper price adjustment is a very strong positive step in so far
as it dramatically enhances the "shelf positioning" of
the home by creating more competition to purchase it. Since something
is being given, this is a benefit to the homeowner.
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