Pricing your home is the key to success!!!
Determining
“Fair Market Value”
Establishing the correct sales price for your home is the most important step in selling your own property.
How to determine “fair market value” is a common concern for our customers. 
In fact, it is the most important decision you will make as a FSBO seller. Do not take this decision lightly. Fortunately, you have several options to help you with that decision. Listed below are the options that you have to determine your asking price. You can ask any price you want; however, financial institutions make loans based on the sales price or appraised value - whichever is lowest.
Price it right, maximize exposure to buyers and it will sell.
1. Do your own homework. COST TO SELLER: Free
This approach involves some work on your part. Simply research the neighborhood or area you live in to find out what homes have actually sold and for how much. CAUTION: Do not use “listed price” as a comparison, only use actual SOLD prices. Ask your neighbors what homes have sold, and for how much (they may know more than you think). Compare the prices of sold homes in your area to your home, and make “adjustments” for any differences such as number of bedrooms, baths or garages, no basement, etc.
WARNING: IT IS VERY HARD FOR A SELLER TO BE OBJECTIVE!
2. Real estate agent Comparative Market Analysis (CMA). COST TO SELLER: Free
This approach to pricing is also a sales gimmick used by agents to talk you into listing your property with them. However, because it is free, you might as well take advantage of it as long as you can put up with the “hard sell” and pressure that you’ll get from agents wanting you to list your property with them, for a commission. Basically what these agents will do is run your address through a computer to determine what homes have sold through the Multiple Listing Service (MLS) in your area. They’ll then compare the “solds” to your property and come up with a suggested price range. For example, they may say your home’s current market value is between the ranges of $200,000 and $210,000. Depending on the motivation of the agents, you’ll probably get a wide variety of ranges ... some will provide you with low ranges thinking they could sell your home at this low price and they could make a fast commission. Other agents will tell you very high ranges in hopes of making you believe that you can make substantially more profit selling through them than you could on your own - unfortunately, this never works!
WARNING: MOST AGENTS HAVE AN AGENDA TO GET YOUR LISTING AND IT IS VERY HARD FOR THEM TO BE OBJECTIVE, TOO!
3. Appraisal by a state-certified residential appraiser. COST TO SELLER: $250-$300
Of all the pricing approaches available to you, we recommend this one. It is conducted by a certified appraiser who has invested years in his/hers reputation to accurately provide fair market values. A certified appraisal can assure you are maximizing price while not overpricing.
WARNING: THERE IS NONE!!
THIS METHOD IS THE PREFERRED METHOD & IS HIGHLY RECOMMENDED!
For Sale By Owner sellers usually price their homes too high to start with. They reason, “I’ll price it high and I can always lower the price later if necessary.” This is a drastic mistake!
ALWAYS TRY TO PRICE YOUR PROPERTY COMPETITIVELY RIGHT FROM THE BEGINNING. If you overprice initially, you will probably be offered thousands of dollars less when it is finally sold, than you would have been offered early on if the price had been competitive. The reasons for this are simple:
1.) A property will not sell quickly if it is not offered at a competitive price.
2.) The most enthusiasm for a newly offered property is during the 1st 2-4 weeks. – Think “New Listing!”
3.) After the first month or so, an overpriced property becomes “shop-worn.” Prospective buyers lose their enthusiasm and may begin to make negative statements about it being overpriced.
4.) New prospects know how long a property has been offered for sale, and if more than a month or so, they assume something is wrong with the property.
5.) Buyers at this late date, knowing how long a property has been for sale, assume the seller must be desperate and will almost always make very low offers.
FACT: Buyers are “market smart.” They know the market. They know how many homes there are in their price bracket. They have already shopped around and know if your home is priced fairly and competitively compared to others.
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Appraisals are very cost effective and our experience has been that they really help home sellers. We highly recommend them. This usually proves to be a very wise investment for a small cost. The appraisal justifies your asking price to a buyer. This will not only add strength to your negotiating position, but also adds credibility to your whole “By-Owner” process. |
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