Definition of Market Value
Market Value is the highest price estimated in terms of money which a property will bring if exposed for sale on the open market allowing a reasonable time to find a buyer who buys with the knowledge of all the uses to which it is adapted and for which it is capable of being used. Frequently it is referred to as the price at which a willing seller would sell and a willing buyer would buy.
PRICING YOUR HOME TO SELL
Probably one of the most important decisions to make when you decide to sell your home.
- REAL ESTATE SALES PEOPLE DO NOT DECIDE WHAT A PROPERTY WILL SELL FOR. The buying public determines what they will, or will not, pay for a home.
- THE COMPARABLE MARKET ANALYSIS (CMA) shows the prices of homes in your area that have sold. It also shows the current asking prices of homes that are now for sale as well as the prices of homes did not sell.
- OVERPRICED HOMES GET OVERLOOKED. Agents don’t like to show homes that they know are priced too high. Buyers have become extremely educated as to what homes are worth.
- WELL PRICED HOMES get buyers excited to make good offers!
- OVERPRICED HOMES JUST HELP TO SELL THE COMPETITION. Buyers are comparison shoppers.
- STALE LISTINGS MAY SELL FOR LESS than it would otherwise have, had it been listed competitively right from the beginning.
PRICING YOUR HOME RIGHT THE FIRST TIME IS ONE OF THE MOST IMPORTANT
ELEMENTS IN OBTAINING THE BEST POSSIBLE PRICE.
Be sure to:
- Select an experienced, local, full time agent
- Select an agent who has seen many of the homes in the analysis
- Be realistic when determining the value of your own home.
PRINCIPLES OF PRICING
The most critical part in preparing to market a home is determining the listing price.
Sometimes pricing a home too low cannot provide the highest return. However, pricing a home too high will produce less than the best return.
The right price produces the best return.
When a price is too high, those buyers for whom the home would be right may not see the house because it is out of their price range. Buyers who are in the price range will not see the property as a good value based on comparables and will buy something else.
Further, some REALTORS® will be reluctant to show an overpriced property, except perhaps to make a competing property look more attractive by comparison.
It is tempting to want to test the market at a high price. While there may seem to be no harm in starting high and lowering the price if necessary, testing the market is risky. A property receives its fullest exposure during the first two weeks on the market. During this time the best buyers for the home will see the property, and if it does not appear to be a good value, will move onto better value properties. And it is rare, that such buyers will return to the property later, even if the price is reduced.
The overpriced home often stays on the market and becomes “stale”. Statistics indicate the longer a house is on the market the lower the selling price is in relation to the asking price.
The evaluation process should be based on evidence; the price paid for comparable properties in recent sales. Since no two homes are exactly alike, however, the evidence must be evaluated to one’s home, the agent’s professional judgement is vital to successful and accurate pricing.