One of the main functions of a real estate agent is to properly price a home for a client when they decide to sell.
One of the challenges real estate agents face is that some home sellers have unrealistic expectations as to what their home is worth.
Buyers are astute to today’s pricing and it is the job of a real estate agent to give buyer’s comparables or “comps” — prices of homes that have sold in the area.
This helps a buyer determine a realistic purchase price.
It is also the job of the real estate agent listing a home to give a seller realistic “comps” so they can set a price that competes with other homes on the market.
Buyers and sellers are diametrically motivated — buyers want a low price and sellers want to maximize their return.
We all think our homes are unique in some way and should command a higher price than that of our neighbors because of these special attributes.
That is true in some respects, if the home has functional features such as an additional bathroom or amenities like as a fireplace or granite countertops. However, non-functional items that we may like but have no value to the buyer are not worth much.
For example, we may love our kitchen cabinet handles, but a buyer may not even notice them.
We often hear sellers say, “Let’s try this price and see what happens.”
Most real estate agents can tell you what will happen at the “see what happens price.”
The real estate agent will be back in 30 days to reset the pricing at a realistic value because no one has been by to look at the home.
Proper pricing of a home is paramount in the first 30 days on the market.
Showing activity will be at its peak if priced properly.
A major factor to consider in pricing a home is that most homes are bought with the buyer placing a mortgage on the home.
If a buyer places a mortgage on the home, the lender will require an appraisal.
The appraiser will use “comps” to establish the fair market value of the home.
If the home does not appraise at the purchase price, the lender will not fund the loan, therefore, the home will not be financed and the buyer will cancel the purchase.
As a result, the seller will have wasted precious marketing time and will have to re-evaluate their pricing strategy.
Think twice before you set a price.
Ray Pugel is a designated broker with Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.