PRICING YOUR HOME

When it's time to sell your current home . . . your first concern, rightly, is price. The challenge in pricing your home lies in the possibility that what you think it's worth may not be in line with current market valuations. Because I follow the market daily at a "micro" level, checking new listings and noting properties that have stayed on the market too long, I bring a sense of the market's pulse and pace to my sellers. The tracking and analysis I do at a "macro" level (see The Market section of this site) gives me an objective view of market trends that most of my competitors can't provide.

The method used . . . to estimate the most probable selling price of a specific property is the Comparative Market Analysis or CMA.

A CMA uses the closing prices . . . of recently sold homes similar to yours (the subject property) to arrive at an educated prediction of the price that your property is likely to bring. It's an informal estimate of market value. A more rigorous estimate of market value is the appraisal. An appraisal ultimately is a formal report prepared by a licensed professional whose occupation is estimating property value for lenders and property owners. Comparative market analysis is the appraiser's principal tool in the evaluation of residential property.

It's essential to remember . . . that the aim of the appraiser and the agent who prepares a CMA is the same: to arrive at an accurate estimate of the most probable actual selling price of the home. That estimate may be presented as a range in a CMA (e.g.. $257,000 to $265,000). In all honesty, it's likely that it will be a smaller number than you'd hoped for. Sellers tend to place a higher value on their homes than the market will actually support.

The value of the CMA . . . is that it represents an objective look at market value using the most recent actual sale prices of similar homes. It takes some of the emotion out of the pricing decision.

Eventually, your property will be appraised . . . When you've agreed to sell to a specific buyer, that buyer's mortgage company will hire an appraiser to provide a totally objective assessment of market value. If the property doesn't appraise for at least as much as the buyer is planning to borrow, the buyer will not obtain financing and the deal may fall through.

Overpricing your home will shrink your potential market and the potential for offers:

Fewer people will come to see the property.

Financing becomes more difficult for buyers.

Instead of reviewing multiple offers at or near your asking price, you'll be rejecting or countering offers well below your asking price.

When you do accept an offer, there is an increased risk that the property will not appraise for what your buyer needs to borrow.

Pricing your home over market . . . can often result in your eventually selling at a price lower than what you would have gotten had you been aligned with the market from the beginning. Pricing your home within an objectively determined market range is quite simply the key to selling early in the listing cycle when the property is receiving its initial burst of exposure and offers are likely to be at their most enthusiastic.

The final decision on the listing price is always yours . . . As your agent, I'm bound to follow your instructions on pricing and presenting your property, to present any and all offers to you and to present your response to any offers. My only allegiance is to you.


	© 2005-2008, William Bixby.
	The opinions expressed on this website are not necessarily those of the H. Pearce Real Estate Company. The market data presented on this website is deemed reliable but is not guaranteed.