The Facts of Life for Home Sellers
You may think you understand the market, but do you really? Sellers sometimes have an inflated view of their own property. They overlook its flaws, and oversell its features, but that isn't the worst part. They think the buyer will fall in love with the same amenities that they did. It's time for a lesson in reality.
These are the laws of real estate that never change. Each of the following facts of life represent a reality which all sellers must face and as a professional I have an obligation to bring to your attention.
Your house cannot sell for a penny more than the best offer obtainable from the best buyer available in the current market.
Recent sales of similar properties have historical value, but the best buyer we are looking for is to be found in the present market place, not in the past record books. Our job is to find that buyer and obtain his or her highest possible offer. No house in history has ever sold for more than the best offer obtainable from the best buyer available in the current market.
The only way to find the true value of a house is to thoroughly test the market and aggressively challenge the competition.
Appraisals and expert opinions can be helpful in establishing a listing price for your home, but its ultimate selling price will be determined by the prospective buyers whom we are able to contact. Buyers will compare your home with other offerings in their price range and make judgments. It is critical that your home be competitive in price and appeal with the other options that these prospective buyers will be considering.
Testing a bigger market and a better market with greater skill yields a better price.
The larger the market you can reach the higher the quality of that market, the better the price you will realize. It stands to reason, for example, that sellers working alone can expose their home only to the small segment of the market that can be reached by a single sign and limited advertising. It is also important to note that, in spite of the multiple signs and substantial sums of money spent on advertising, these two sources typically account for only 20% of the actual buyers attracted to a typical real estate office. The other 80% of the market are represented by the efforts of cooperating agents and the marketing activities of real estate companies and associates. It is also well established that the buyers most ready, willing and able to act are almost invariably availing themselves of the services of real estate professionals. Finally, the best buyer, unless a skilled professional is handling him or her, can often come and go without making a commitment.
An appropriate listing price will immediately and consistently attract attention and generate activity.
The process of testing the market need not be a lengthy one, regardless of marketing conditions. As we said before, buyers do comparison-shopping and act accordingly. When a property is first exposed to the market, both buyers and agents make instant evaluations of the offering, and if it compares favorably with what they have already seen, it will not only attract their attention, but stimulate them to inquire for details and arrange appointments to inspect. Your listing price must be realistic enough to immediately attract this attention from buyers and agents. If it does not do so, while competitive properties are attracting attention and generating activity, you have a clear indication that the listing price is not meeting the acid test of the marketplace, regardless of economic conditions or other external considerations.
A home that is priced realistically and marketed effectively will always sell.
There's an old saying that the three most important words in real estate are "location, location, location." Like a lot of old sayings, it is simply untrue. No matter how poor the location might be, there is a price at which it will sell, and the price will be determined by testing the market. The three most important words in real estate, therefore, are Price, Price and Price – followed by marketing. Unless the price and terms are competitive, the chances of a home selling are slim to none; and even realistic pricing should be supported by the thorough testing of the market and aggressive challenging of the competition that can best be performed by skilled professionals.
When realistic pricing is combined with effective marketing, there is a buyer for everything and, given these conditions, any home can be sold in any market. Homes that languish unsold on the market for months or even years are ignoring these "facts of real estate life," often causing unnecessary inconvenience and financial damage to their owners and agents.
The market is not always kind, but it is never wrong, and those who believe otherwise pay a heavy price for ignoring these facts of life.
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