What happens to an Overpriced House?

  • You will help sell the competition...someone else's house!  Most buyers are competitive shoppers.
  • Your home will stay on the market a long time. Did you know that 80% of your potential buyers will see your house in the first four to six weeks? If you do not sell them then, it takes approximately three months to replace them with an equal number of newcomers.
  • You’ll lose market interest and qualified buyers.
  • Serious buyers use the value, quality and price of similar properties as deciding factors.
  • A negative impressionis created. People will wonder why your house is still on the market. They’ll believe something is wrong with your home.
  • You (the seller) would lose money. You may have to make extra mortgage payments as well as incur taxes, insurance and unplanned maintenance costs.
  • You (the seller) may have to accept less money. Studies show that the longer a house is on the market, the greater the discount off the list price. Often, a seller will accept less than fair market value in order to sell because of an approaching deadline.
  • There is the potential for appraisal problems. The appraiser from your buyer’s lending institution must agree that the home is worth the asking price. If the appraiser believes the price is inflated, the loan may not be approved, and you could lose a qualified buyer.

As you can see, there are a multitude of factors that determine the asking price of your home. Finding this price yourself can be a long and difficult task. The Realtors at Branam’s Inc. Real Estate & Auctions have all the tools necessary to compute the fair market value of you house quickly and accurately. Your Branam’s Inc. Realtor can also confidently answer your questions about listing, pricing, and showing.

Branam’s Inc. Real Estate & Auctions can make selling your home a pleasant, effortless, and hassle free experience for you!

    • The Asking Price...

    Here are some factors to consider - recommended by experienced Realtors - to help you sell your home. This information is not all - inclusive and does not replace the expertise provided on a one on one consultation with a Branam’s Inc. Realtor.

    What affects your asking price...

    • Urgency. How quickly must you sell?
    • Competition. Supply and Demand. Are there just a few or many homes available in your price category and area?
    • Available financing. Does your home come with an assumable loan that is below today’s rate?
    • What are the current home loan interest rates? What financing alternatives are available for your home and area?
    • Current Market. Do you know what similar homes in the area sold for within the last six months?

    What does not affect your asking price...

    • Original Cost. Your price is determined by today’s market.
    • Investment in improvements. Potential buyers will evaluate your home (i.e. wallpaper and carpet) and may include the costs to remove or replace in their offer.
    • The cost to build your home today. Replacement value is determined for insurance and appraising purposes only.
    • Personal Attachment. Prudent buyers purchase based on their emotions, not yours.
    • Neighbor’s claims. Do not listen to what your neighbors tell you is the fair market value for you home. Other homes in your neighborhood may not be as similar as you think. Also, the terms accepted by both the buyer and seller greatly affect the sale price.

    Every reasonable owner wants the best possible price and terms for his or her home. Several factors, including market conditions and interest rates, will determine how much you can get for your home. The idea is to get the maximum price and the best terms during the window of time when your home is being marketed.

    In other words, home selling is part science, part marketing, part negotiation and part art. Unlike math where 2 + 2 always equals 4, in real estate there is no certain conclusion. All transactions are different, and because of this, you should do as much as possible to prepare your home for sale and engage the REALTOR® you feel is best able to sell your home.

    What is your home worth?
    All homes have a price, and sometimes more than one. There's the price owners would like to get, the value buyers would like to offer and a point of agreement which can result in a sale.

    In considering home values, several factors are important:

    • The value of your home relates to local sale prices. The same home, located elsewhere, would likely have a different value.
    • Sale prices are a product of supply and demand. If you live in a community with an expanding job base, a growing population and a limited housing supply, it's likely that prices will rise. Alternatively, it's important to be realistic. If the local community is losing jobs and people are moving out, then you'll likely have a buyer's market.
    • Owner needs can impact sale values. If owner Smith "must" sell quickly, he will have less leverage in the marketplace. Buyers may think that Smith is willing to trade a quick closing for a lower price -- and they may be right. If Smith has no incentive to sell quickly, he may have more marketplace strength.
    • Sale prices are not based on what owners "need." When an owner says, "I must sell for $300,000 because I need $100,000 in cash to buy my next home," buyers will quickly ask if $300,000 is a reasonable price for the property. If similar homes in the same community are selling for $250,000, the seller will not be successful.
    • Sale prices are NOT the whole deal. Which would you rather have: A sale price of $200,000, or a sale price of $205,000 but where you agree to make a "seller contribution" of $5,000 to offset the buyer's closing costs, pay a $2,000 allowance for roof repairs, fund two mortgage points, re-paint the entire house and leave the washer and dryer?

    How much is too much?
    Because all transactions are unique there is flexibility in the marketplace. The amount of flexibility depends on local conditions.

    For example, suppose you're selling a townhouse. Suppose also that there have been five recent sales of the model you own and that sale values have ranged between $200,000 and $210,000. You now have an idea of how your home might be priced. In a strong market perhaps you can ask for $210,000 or a little more. If the market has slowed, $210,000 may be a reasonable asking price, but perhaps more than the final sale price.

    Here's another scenario. Imagine that you live in a community of Victorian-style homes, most of which were built in the 1920s. All the homes are different in terms of size, condition, modernization, style and features. In such a neighborhood, an average sale price is just a statistic without much practical meaning. On a single block one home may sell for $400,000 while another is priced at more than $1 million. The average price may be outrageously high for one home and staggeringly low for another.

    Who can help?
    Your experienced Branam's Broker's are active in the local marketplace and can provide assistance with pricing, marketing, negotiation and closing.

    Because Branam's have handled many transactions, they're familiar with the terms and conditions that went into individual sales, not just published sale prices which may not reflect various premiums, discounts and adjustments.

    Set Your List Price
    Setting the list price for your home involves evaluating various market conditions and financial factors.

    During this phase of the home selling process, your Branam's Agent will help you set your list price based on:

    • Pricing considerations
    • Comparable sales
    • Market conditions
    • Offering incentives
    • Estimating net proceeds

    Pricing considerations
    In setting the list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors: If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your Branam's to "Bring me any offer. Frankly, I’d take less." But compared to other houses for sale, your home simply looks too expensive to be considered. If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.

    TIP: Never say "asking" price, which implies you don't expect to get it.

    Using comparable sales
    No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market. Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood like yours. Branam's  can furnish data on sales figures for those "comps", and analyze them for a suggested listing price. The decision about how much to ask, though, is always yours.

    The list of comparable sales Branam's  brings to you, along with data about other houses in your neighborhood presently on the market, is used for a "Comparative Market Analysis (CMA)." To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices. This CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. In addition, an appraisal is done for a fee while the CMA is provided by Branam's and may include properties currently listed for sale and those currently pending sale. In a normal home sale, a CMA is probably enough to let you set a proper price.

    A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price, or if there is any other circumstance that makes it difficult to put a value on your home.

    TIP: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report -- the kind that's complete with photos of the house and neighborhood, a map specifying the site, and floor plans is sufficient.

    Consider market conditions
    A Comparative Market Analysis (CMA) often includes Days on the Market (DOM) for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months. Branam's can tell you whether your area is currently a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.

    Offering incentives
    Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your Branam's Agent and work out a schedule in advance. If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.

    Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution. If you haven't had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be "to the broker who brings a successful offer before Christmas."

    Estimating net proceeds
    Once you’ve been given an estimate of market value by your Branam's Agent, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful as you start looking for another home to buy. From the estimated sales price, subtract:

    • Payoff figure on your present loan(s)
    • Broker's commission
    • Any prepayment penalty on your mortgage
    • Attorney's fees, if any
    • Unpaid property taxes

    In addition, Branam's can tell you whether local customs or rules dictate that the buyer or seller to pay for the following items:

    • Title insurance premium
    • Transfer taxes
    • Survey fees
    • Inspections and repairs for termites and the like
    • Recording fees
    • Homeowner Association transfer fees and document preparation
    • Home protection plan
    • Natural hazard disclosure report

    As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. Branam's will assist you in estimating what your final closing costs will be.

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