|
|
|
Bob-ism: Anything will sell at the right price! It's true, if you think about it. If you put your home on the market for $90,000 or $100,000 less than it's value, you would get people lining up around the corner to make an offer on it. Would you not?
Conversely, if you price your home $10,000 or $20,000 more than what the market thinks that your home is worth, it will sit there! It's simply economics at work. That's one of the reasons that they call it the dismal science and it's one of the reasons that going FSBO doesn't make economic sense.
What? What kind of tripe are you trying to slide in on us there Bob?
It's true. While FSBO's don't have to shell out the real estate commission directly, they weren't 
going to have to shell it out anyway (or at least not the whole commission). This is because homes that are listed for sale with a Realtor have a much larger group of potential buyers available to them. The law of supply and demand tells us that if you have the same number of homes available for the buyer and the number of buyers increases that the sales price of the homes will go up.
It's hard to get a solid statistic to illustrate this point, but it's commonly accepted among economists that a listed home will sell for as much as 9% more than a comparable For Sale By Owner. Even if you are extremely conservative and cut that number in half, the truth of the matter is that the buyer is the one paying the lion's share of the commission, not the seller.
Anyway, back to pricing homes in the St. Louis real estate market. How do you figure out the highest price that you will be able to get for you home. In one way it's a pretty simple procedure. That said, I've been doing this since 1984 and I don't have it 100% of the way down.
What I have found is a process very similar to what an appraiser uses when he's determining value.
The first thing that you do is to look at the comparables (houses similar to yours that have sold recently). The closer to your home that the comparable is, the better it is. The easiest way to get these "comps" is to have an agent do a CMA (competitive market analysis) for you. If you would rather not go that route, Zillow.com compiles a database of sold homes.
This will give you a ballpark value for your home. Please be careful not to take the zillow estimate too seriously, it's a great idea but still not very accurate on a consistent basis.
After you have your comps, you need to adjust for the differences between your home and each of them. For example, say that your home has a superior lot and your opinion of the market tells you that people would pay an extra $10,000 for your lot as opposed to the lot on your first comp. Then you would subtract $10,000 from the sales price of that comp.
If that home had a feature that was superior to yours, say a finished lower level. You would assign a value to that feature and adjust the price of the comparable up by that amount.
So forth and so all with all the comparables. When you're done with the adjustments, average the adjusted prices out and you have a pretty good indication of the value of your home.
Next, you look at what you are competing against. If there are three homes
that are on the market that are similar to yours, how would yours stack up? At what price would you pick your home over one of them? Sometimes you can squeeze an extra $5,000 or $10,000 dollars out of your home if the other homes that you're competing against are that much higher. However, sometimes, you'll have to take it in the shorts because your neighbors are giving their homes away.
The important thing to remember is that when pricing your home you have to think like a buyer, not like a seller. How much would you be willing to pay for your home? At what point would you forgo yours and make an offer on one of the other homes that are available?
Again, as mentioned above, the easiest way to determine an asking price is to have an agent do a CMA for you. ValueList will be happy to prepare one on your home with no cost or obligation. Simply click on the "Contact Us" link at the bottom of the page or call us.
Click Here To Go To Going FSBO Or Listing With An Agent (Next)
Click Here To Return To Seller's Information And Tools - Introduction
Click Here To Return To Main Page