Great blog... Absolutely right about "chasing the market"... we are the market... in essence, the market chases us. Buyers market, yes... but also, buyers beware!
When someone is thinking about selling their home, they need to consider the stability of their local market, the available loan programs as well as their competition.
Let's say, you have a home that is typical for your neighborhood. Three to Four Bedrooms, 2.5 bathrooms, Two Car Garage. The Market Range is somewhere between $250,000 and $275,000. The neighborhood is steady but homes that are selling more are in the high $100,000 price range. Three bedrooms, 2 bathrooms with a Two Car Garage. But you, Mr. and Mrs. Seller want to test the market out at $295,000 because you think you might get the price.
Here's what happens in overpricing:
- The market is still adjusting and so home values decline every month in your neighborhood
- Your competition sees that you want a certain price, so that seller decides that while his home is in the same price bracket $250,000 to $265,000, he feels that if he lists his property just under the $250,000 price range, he just might drive in multiple offers.
- If you have a mortgage, every month you have to pay for it and the upkeep. It's called carrying costs and eats away at your final net price at the end of the day.
- If your home is vacant, there are chances of vandalism. There was a similar situation like that in our office (not my listing, btw) where the home was vacant and the insurance policy was canceled and the homeowner had to pay for the damage because the home was no longer occupied. (not a non-seasonal/seasonal/vacation home)
- Your competition closes on their home at $248,500 and now that is no longer the base line but the highest you will be able to get for your home in the market place since you are now 160 days out since you went on the market.
Your best bet is to price the property "in the market" and not "chasing the market".
It's your highest net that you are looking for not the ability to say "We got $5,000 more then Joe down the road even though it took us 7 months longer."
My suggestion is to get an appraisal as well, The best investment you can have that will back up that value. I suggested that to a friend up in Michigan and the appraisal and the Comparative Market Analysis were extremely close. That's your best bet for the highest net price .. that, and well, a good real estate agent.
This information is provided to you by Barb Van Stensel of Keller Williams Lincoln Square with a commitment to support the Chicago, IL community.
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Disclaimer: If this post includes a listing, information is deemed reliable as of the date it is written. After that date, the listing may be sold, listed by another brokerage, cancelled, pending or taken off the market OR the price could be changed without notice.