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Pricing Your Home

The single most important tool in your marketing plan

Pricing your home in this market is the KEY to success.

Lot's of people dance around this subject.

Sure everyone wants to talk about real estate and home sales. Heck, there is a whole network devoted to our facination with homes and home sales. People watch hours of shows dedicated to home buyers searching for the perfect home. TV Real Estate Agents show their buyers three homes -- then the buyers pick one (I wish that would happen -- LOL). Some viewers even find themselves guessing which home they would pick. But, what is missing is the single most important piece of information in the decision process - Pricing.

Pricing your home may very well be the single most important tool in your marketing plan. A proper pricing strategy in the marketing mix may mean the difference between selling your home quickly and at the HIGHEST PRICE possible or languishing on the market and multiple price reductions.

Many sellers and realtors, alike, make the mistake of pricing the home too high. "Couldn't we just try for a couple of weeks?" The majority of showing activity on a new listing occurs in the early stages of marketing a home then activity declines.

I have been asked, "What do you think that agent was thinking when they priced that home? It is priced way too high." It is easy to get lulled into the belief that your home (and your emotional attachment to it) is worth more than your neighbors. Well, to be truthful, it isn't.

Today's market is based on price AND today's lending practices are very conservative. Banks and lenders will look at the COMPARABLES. Not the asking price. They use the actual SOLD price.

Experienced real estate agents establish a Pricing Strategy after they assemble all of the information regarding the property, the house and its improvements. This will be the foundation for further research to develop a Comparative Market Analysis (CMA). This in-depth report will help determine the proper price and position in the current marketplace. 

It is important to challenge the price in the market when selling your home. To challenge the market means to price it at what other homes have SOLD or slightly under those recent sold comps. This may even help stimulate mulitiple offers. Yes, there are buyers out there and there are multiple offer situations.  

A range of similar homes where the property is located, and the recent selling prices in the area, will help determine the proper asking price. This CMA not only takes a considerable amount of time to develop, but also encompasses years of experience (by the agent and/or broker) in dealing with the LOCAL marketplace to properly evaluate and complete the report.

When compiling the information for the CMA, an agent will first take note of properties recently SOLD that are both comparable in style, size, age, condition, and location to the home. In today's economic climate that means SOLD within the past 3 to 6 MONTHS (not 12 to 18 months). Properties currently under contract between 0-90 days are also included. Properties currently on the market (availables) are also used to gain a true picture or context of the competition.

A graphic analysis should be formulated to compare the relationship between the asking price, the selling price, and the number of days on the market for sold properties. These graphics will help you visualize how very important proper pricing is to a successful sale.  It will also illustrate the number of day on market (dom). The faster the property sells, the higher the price you will receive. 

So when you ask an agent, "What do you think my home is worth in this market?", the answer should not be off the cuff. Real work needs to be done.

Establishing proper pricing after assembling all of the information regarding the property, the house and its improvements will result in developing a strong Comparative Market Analysis (CMA). A strong CMA is as close to a formal appraisel as you are going to get. In addition, this CMA would be also compared to the home's tax value.

REMEMBER: Time is MONEY. The faster the property sells, the higher the price you will receive.

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Copyright - Pamela Stetson 2012 , www.PamelaStetson.com

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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