Pricing Your Home to Sell

Kathy Pilon, BrokerRealty Executives Cold Lake5308 50Ave, Cold Lake, AB T9M 1P5Kathy.pilon@gmail.com780-815-0888

REALTY EXECUTIVES

Preparing

©REALTY EXECUTIVES International, Inc. 2003

Steps of the Listing Process

Preparation & researchInitial MeetingEstablish motivation & objectivesExamine marketing planSelect a real estate agentEstablish the asking price

What are your objectives?

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How Will You Select a Real Estate Agent

Best service and marketing plan.

Or Highest listing price

An agent doesn’t control the market.

Never select an agent based on price.

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The Role of a Real Estate Agent in Pricing

There is no “exact price” for Real EstateI don’t tell you what I think your home is “worth.”The market determines value.Together we determine the price.I will show you a range of prices being paid for homes in your area.

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What influences house values?

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1. Location

2. Financing

3. Marketing

4. Condition

5. Price

Given

Given

Agent

Owner

Owner

Who Controls What?Factor Control

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Principles of Evaluation

Cost The amount paid

Price The amount asked

Value Worth to someone

Market Value Appeals to many buyers and causes a sale within a reasonable time.

“We’ve got a lot of money in our

home.”

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Principle of Substitution

“I need to get my costs out of it.”

Value: $250,000 Value: $_______?

Value is determined NOT by what an owner has IN a property…It is determined by what a purchaser gets OUT of it.

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What about the value of my improvements?

“What about the Value of my Improvements?”

When were the improvements made?At that time, were you planning to move?If you’d known you were going to move, would you still have made the improvements.If the improvements were not there, what percent of today’s buyers would put them back and pay what you did?

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Regression and Progression

Regression

Progression

Regression: The value of a larger home is reduced by the influence of smaller surrounding homes.

Progression: The value of a smaller home is increased by the influence of larger surrounding homes.

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Criteria that Determine Value

Location & Size account for the majority of Value.

Amenities & quality contribute less.

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Factors That Don’t Affect Value

What you paid for the homeThe cost to rebuild it todayYour investment in the improvementsCertain types of improvements.

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Factors That Affect Value

Comparable sales# of homes availableAvailable mortgage moneyGeneral economyFavorable terms.

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How Buyers Determine Value

By comparing it to others for sale at the time.

Buyers STILL determine the value of a home by Comparison Shopping.

When you bought this home how did you establish value?

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Opinion of

Value

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External Influences

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What is the Market Trend?

What is happening in the market today?

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In a rising market, you can overprice and the market will catch upIn a flat market, a high asking price won’t be “saved by the market”In a declining market, even a market price may be too high as prices drop

Pricing Strategies for Today’s Market

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Proper Pricing

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Advantages of Proper Pricing

Faster SaleLess InconvenienceIncreased Salesperson ResponseMeans MORE money to the sellersBetter response from advertisingAttracts higher offersAvoids listing becoming “old”

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Means more money, a quicker sale and fewer problems!

The Best Offers are the First Offers

The first offers are usually the highest and the longer the home is on the market , the lower the final sale price will be.

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Pinball Listing

An overpriced home makes other homes appear more attractive

Buyers will “bounce off”

an overpriced home and purchase a properly priced one.

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Considerations of a Relocation Move

1. Corporate offer is based on a professional appraisal

90-120 day market timeAs-is conditionVacantClean Offer

2. Employee sale results in benefits to transferee

May be eligible for selling bonusFamily moves togetherMay increase net equityAvoids long market time

3. Extended market time due to overpricing reduces marketability

Corporation may be unable to sell at boy out priceLoss on sale is charged to employee’s companyCompany may debit employee’s department

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Effects of

Overpricing

“But we need the money.”

The benefits of moving must be greater than the need for the desired price.

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“They can always make an offer”If you Overprice…

The right buyers won’t see it.The higher priced buyers won’t want it.

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Homes are Searched to Show by Price Range

Real estate agents don’t determine what buyers buy, they do determine what buyers see.If your home is even $1 higher than their target price range it won’t even show up on the list.

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“We can always come down.” The History of an Overpriced Listing

As time goes on buyers start to wonder what was wrong with the houseActually there was nothing wrong with the houseThe house was priced too highSellers end up taking less then they would have if it was priced correctly and it took way longer

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“Couldn’t we just try it for a few weeks?”

Majority of market activity occurs in the first few weeks on the market-making it the worst time to overpricePrice it right during first exposure to capture the best buyers

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“We are moving to a higher priced area.”

Your destination doesn’t affect the

value of your home

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“We had a higher appraisal?”

Two factors determine the validity of an appraisal1. Time

How long ago was the appraisal done

2. PurposeWhy the was appraisal done

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“We want to test the market.”

The CMA “is” the test of the market.If the CMA didn’t come up with the

right number maybe now is not the right

time.

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Obstacles to Proper PricingIncompetent agents who will accept a listing at any priceNeighbors who mislead the seller as to how much they got for their homeFear of making a mistakeLoss of perspective because the seller is emotionally involvedNeed to realize a certain amount of cash out of the sale.

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Don’t Get Caught Saying This:“Another agent said it was worth more”“Our home is nicer than those houses”“People always offer less than asking”“We can always come down on price”“We have to get that much out of it”“We paid more than that for our home.”

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Overpricing results in…

Reduces sales associates activityReduces marketing responseLoses interested buyersAttracts the wrong prospectsEliminates offersHelps sell the competitionExtends the market time.

Pricing it right results in…

More MoneyQuicker SaleBetter TermsFewer Problems

Look for my other presentations…For BuyersPreparing for HHT & More.www.HouseHuntinginColdLake.comKathy Pilon’s YouTube channel

http://www.youtube.com/user/katpilon?feature=mhw5

Presented by:REALTY EXECUTIVESCold Lake

Kathy.pilon@gmail.com780-815-08885308 50 Ave, Cold Lake, AB T9M 1P5

Kathy Pilon