When Selling - Proper Pricing is Critical
by Brandon Cornett
So how does one go about selling a house in the current economy? For starters, you need to price your home properly. The pricing process intimidates a lot of sellers. It doesn’t have to be scary or confusing. Here are some tips to help you get it right.
1. Detach Your Emotions
When you live in a home for a certain length of time, you develop an emotional attachment to it. This is perfectly natural. After all, it’s your “safe haven” from the world. It’s where you go for privacy, security and relaxation. It might even be the place where you witnessed your child’s first steps, or their first day at school.
But the thing to keep in mind when selling your house is that emotional value does not carry over into financial value. In other words, you can’t price a home based on the memories it holds or the good times it has given you. You cannot set the selling price based on what the place is worth to you. Instead, you must base your numbers on what the house is worth in the current market, based on the concept of comparable sales that we will discuss below.
You might think this is something of a no-brainer or an obvious point. Yet, you would be surprise by how many sellers let their emotions get in the way of real estate reality.
2. Research Comparable Sales in Your Area
The pricing process will be much easier for you when you research comparable sales in your area, as well as homes that are currently listed for sale. The real estate terminology for this is “comps,” short for comparable sales. Here, we are talking about homes that are similar to yours that have been sold in your area recently. By using this information, you can determine your own price — and it will be based on real data, not on emotions.
Working with a real estate agent during your selling process, will be easier for you. Researching comparable sales is one of the things an agent will handle for you. Agents refer to this trsearch as ' comparative market analysis,' or CMA.
3. Consider Supply and Demand
This is always an important consideration for sellers, but right now it plays a major role. Due to recent economic events, the supply and demand of real estate is out of balance in some areas. The subprime mortgage crisis has led to record numbers of home foreclosure, which drives up the supply of houses. But it has also become much harder for buyers to qualify for mortgage loans, which decreases the demand. When supply goes up and demand goes down, it becomes a buyer’s market. This is what’s happening in some cities across the country right now.
Of course, there are some anomalies in certain cities across the U.S. For example, in Atlanta, Ga., while we have our difficultiis, the market has not suffered as badly as other like Miami. The reasons are twofold — (1) housing prices were not artificially inflated before this crisis, and (2) there is a high rate of people relocating here from elsewhere in the country.
To determine the supply and demand situation in your area, you’ll have to do some homework. Your Real Esate Agent is a good place to start.
4. Conclusion and Going Forward
Depending on your location, it may be harder to sell a home in today’s market. The key is to go into the process with proper research and expectations. If you do your homework and price your home based on real market conditions — and if you do a good job preparing and marketing the property — there is no reason you can’t sell in a reasonable amount of time.
About the Author: Brandon Cornett is a consumer advocate and publisher of the homebuyinginstitute.com. You may visit the author's website at www.HomeBuyingInstitute.com to learn more about this topic.