The Art and Science of Properly Pricing a Home
Whether it's at the Delaware beaches or really anywhere else in the world, property owners wishing to sell their homes for the highest possible return must learn the subtle art of properly pricing their properties for the current market.
You might have the finest property known to man, and really doesn't everyone feel that way about their family home? But if it's not priced right, it very well might not sell.
In the third installment of our five-part series on selling your home, we look at Oldfather Group CEO Dustin Oldfather's time-tested "pricing strategy."
While based in Rehoboth Beach, Delaware, which is certainly its own unique market, these strategies really work anywhere around the world. If implemented correctly, these Delaware real estate tips will help you realize top dollar when selling your home at the Delaware beaches and beyond.
Okay, so let's jump right in and examine the art and the science of Dustin's pricing strategy.
When we're pricing a home for sale, we first need to determine what the perceived market value of the home actually is. If you're not familiar with this term, it's basically what the home is likely to be valued at once a professional appraiser has come out to take a look.
This is determined via a Comparative Market Analysis, or CMA, where we take a look at the following:
- Characteristics of Other Homes in the Neighborhood
- The Age of the Home
- The Acreage of the Property
- The Square Footage of the Home
- The Style of the Home
We take all of these characteristics and determine a price range we think a professional appraiser will come in at. We may not hit it exactly on the head, but it's going to be pretty close.
Once we've determined the home's perceived value, we next need to consider market timing and where we are in the current cycle. We tackled this topic in the first part of this series, which you can read and/or review by clicking here.
If currently in an ascending market, we'll probably want to price the home slightly higher than the perceived value to see what kind of reaction we get from potential buyers. If the market is descending, however, our goals should be a bit more tempered.
The third possibility is a stable market, which means we're usually going to price the home at right around the perceived market value.
Once we've determined which of the three market cycles we're in, we have a few options when it comes to pricing and eventually selling your home.
These strategies include:
If we're going this route, we'll price the home slightly below perceived market value to receive multiple offers from buyers.
The goal here is to get people competing against each other for your property so that reason eventually goes out the window and the price escalates. This strategy often results in just that, with multiple offers and escalation clauses eventually coming into play.
When this happens, we negotiate with the best choices and pick the buyer who offers you the price and the terms you're looking for.
One caveat - you'll want to work with an experienced agent for this strategy as navigating multiple offers can become quite complex and you could risk legal exposure if it isn't handled in the proper way.
When searching for a Realtor, ask right away how they would handle multiple offers. You'll know pretty quickly if this is someone you want to work with.
If you want to obtain both the price and the time on market you're hoping for, it's probably best to price the home slightly above the perceived market value.
When you select this pricing strategy, you'll have a lot of people looking at your home and hopefully offers will start coming in.
And if they don't come in right away, you can afford to stand firm for a while as you know the home is priced fairly and the right person will eventually come along.
This is exactly as the name implies, it's pricing your home above the perceived market value and seeing how the market reacts.
Maybe you have a unique property that doesn't have clear comparable sales in the neighborhood. Maybe it has intrinsic value or is the nicest home in the community.
For whatever the reason, you've determined that you want to set a new market and see how potential buyers react. This strategy will usually result in qualifed buyers who have a sincere interest in your property, but it may not happen overnight.
You'll generally have fewer showings and less activity. But if you've decided to go this route, you're probably not in that big of a hurry anyway.
The bottom line here is that there are many ways of selling your home, but it often comes down to pricing it properly in order to get top dollar. And if you've selected a quality Realtor, he or she can help you do just that.
Join us again in a few days for the fourth part of this series on selling your home, which deals with Dustin's marketing strategy.
Until then, have a great week at the Delaware beaches or wherever you happen to call home.
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