Helping Sellers Understand Listing Prices
Whenever someone puts their home on the market, they are making a big decision with serious financial and emotional implications. With this in mind, it’s understandable that each seller would want to get the most value for his or her property. Many times, sellers become frustrated with an agent’s listing price due to false perceptions and unrealistic expectations. To help your clients understand how and why you reached your listing pricing conclusion, consider the following.
Clearly Outline Key Factors
Few homeowners understand all the circumstances that go into real estate valuation. To get on the same page, it helps to explain the key factors you considered when setting a price. These usually include:
- Comparables: How much have other homes in the neighborhood sold for recently. Does this house compare in terms of size, amenities and upkeep?
- Competition: How many other properties are currently for sale in the area? Is this property directly competing against these?
- Contingencies: Are there special reasons that might force a quicker sale. For instance, does the buyer need to move in three months?
- Appraisal: What is the market-value appraisal of the property in the current, local real estate environment?
- Lender attitudes: Since the vast majority of buyers require a mortgage, it’s important that the home listing price be in line with a lender’s value assessment.
Some homeowners will want to see data backing up your listing pricing assessment. In these cases, it’s important to have a Comparative Market Analysis that details the selling prices of similar properties and how long they were on the market. You should also cite the many studies showing that properties take much longer to sell if they are priced just 3 percent over their actual market value.
What About Competitive Markets?
When inventory is high, it’s much easier to convince sellers they need a conservative listing price. On the other hand, when inventories are low and buyer competition is high, some sellers want to shoot for the moon. Unless you operate under a similar philosophy, explain that the seller is better off setting a fair value, rather than posting an unrealistic figure and waiting for responses to help flesh out the “right” listing price. On the other hand, if the seller insists on setting a higher listing price, explain the importance of remaining flexible during negotiations.
Learn more about how a Home Warranty can save homeowners from unpleasant financial surprises and add value to your business.