PRICING YOUR HOME CORRECTLY
The Eight Principles Of Pricing Your Home
Pricing must begin with the market value based on reliable market information.The only accurate way to calculate market value is by comparing your home with similar homes that have been sold in the current market - i.e. relatively recent sales.The ideal comparison would be a recently sold home that was exactly the same in respect to age, condition, construction, size, location, access, garaging, view, setting and chattels. Obviously ideal comparisons are not always easy to find but our objective is to find quality comparisons, i.e. properties that are as close to the ideal as possible.
Current listings are not the basis for valuing your home.
The number of similar homes on the market indicate how much competition your home will have, but they are not a reliable guide for calculating the market value of your home.Using current listings as a basis of comparison is risky and illogical. All too often the prices of these homes reflect what the owner wants to receive. The real value is what they will receive when the property eventually sells.
The only way to estimate market value is by comparing your home with similar properties that have sold. Unlike current listings, the market has valued these homes. The reality is that the market always determines the value - not the seller.
The Owners cost does not equal the market value. Market value in any market is just that. It is value set by the current market value is not based on what the owner paid, but by what the buyer is willing to pay.
The price you originally paid for your property indicates the value of that property at the time it was purchased. It does not indicate what it is worth today. The only way to determine its value today is to use today’s market for a guide.
Improvements are generally made for one of three reasons and your actual costs have little (if anything) to do with their value in the market.
Most buyers (except bargain hunters) expect a home to be in reasonable condition. This is particularly true in such areas as wiring, plumbing, drainage, foundations and roofs.
The owners cost for maintenance and repairs are not something a buyer takes into consideration. These types of improvements are more likely to make a home more saleable rather than adding appreciably to the market value.
b. Your Own Enjoyment.
These are improvements that you have generally made for your own use and enjoyment. Generally, they strongly reflect you own taste and lifestyle.
The actual value relates more to how well they reflect the buyer’s taste and lifestyle, and more importantly how they compare to features in competing homes.
This is the least common reason owners make improvements. It is possible to make improvements that will increase the market value beyond the costs incurred, but it is not easily done.
Generally this is only successful if the owner has carefully researched the current market or has had expert advice.
Government Valuations are calculated for rating purpose not for market value. There are three reasons why Government Valuations do not accurately reflect the current market value. They are done on a mass scale and most homes have only had a superficial inspection or none at all. Valuations are valid anywhere from one to four years and will not reflect changes in the market during that period. They also cannot reflect any changes such as improvements or deterioration that occur either in a property or in the surrounding area.
Market values and your financial agenda are two separate market issues.
The hard reality of any market place is the outcome that the seller desires or needs to achieve by selling has nothing to do with the value of the product they have to sell. This is true if you are selling a washing machine, it is true if you are selling a car and it is certainly true if you are selling a home.
Sellers who base their price on what they need or want are ignoring reality.
It is the market (and only the market) that determines the value.
The only realistic and reasonable way to approach pricing is to determine the market value first.
Real estate markets do not automatically increase in value.
Many people still believe that real estate values automatically increase over a period of time. Decades of high inflation have contributed to this belief but, in fact, it is not true. There are a number of factors that can cause real estate to increase in value, such as inflation and interest rates, but these factors also have the same potential to decrease values. It depends entirely on how they impact on the supply and demand forces in a particular market. This is important to remember that markets can and do change. This is not something you or your agent can control, nor is it yours or your agent’s fault.
Price is the key to achieving maximum advantage during the crucial first weeks of marketing. It’s important to understand that there are some well established advantages to having the price right when your home first goes on the market and some distinct disadvantages if it goes wrong. The initial marketing period, usually the first two weeks, is a critical time in the market. This is because it is the time when the most prospects and the best potential buyers are available. Our research has shown that buyers look at an average of 14 properties before they buy. As a consequence they will stay in the market anywhere from a couple of weeks to several months.
A decision to sell is a decision to meet the market. Anyone who wants to sell in the real estate market must deal with one basic reality. The market operates on the basis of supply and demand, and these are the key factors that will determine the value of the property. A seller cannot dictate to the market nor can they control it. Vendors approach pricing in one of two ways. They can decide what they want and basically “demand” the market accept it, or alternatively, they can determine what the market will accept and price their property accordingly. The first approach is in direct contradiction to the way the market operates and is rarely successful. More often than not it leads to lost time or lost money, or both. The second approach is sensible, and is in line with the reality of the market. If the seller is wise enough to do this from the very beginning they are more likely to achieve the best possible price in the shortest possible time.
My job is to make certain that you understand the market, and to do everything I can to achieve the best possible market price, as quickly as possible. That is my purpose.
Right now you can take advantage of my current offer of a free no obligation home appraisal to determine the true market value of your property. You will also be eligible for $1,000 worth of free advertising should you decide to sell.
Receive a complementary, no-obligation market appraisal of your property.