By Angie Mager
Since we've started holding monthly Home Selling Seminars, one thing has remained consistent. Customer Satisfaction! One attendee last week wrote "Really appreciated the 'inside' knowledge that was shared." In the post-seminar evaluations, attendees consistently rate the seminar as "Excellent."
There has been one change we've observed over the last year. In the pre-seminar questionnaires, we ask potential home sellers to rank topics in order of importance to them. 'Pricing Your Home' has slowly overtaken 'Handling the Legal Paperwork' as the top concern. Sellers know that pricing has become crucially important in today's buyer's market. If you're not priced right, you're wasting your time.
We address pricing homes in our monthly seminar, and we discuss it extensively with all clients. We've also previously addressed how to price your home in an article in this column. The information is still relevant and can be found at www.ByOwnerPros.com/news.
This article will address how selling by owner (and pricing correctly) can give you a competitive advantage when selling your home. We'll explain a concept that we call FSBO Math (For Sale By Owner).
Let's take a homeowner who's done some basic research and knows their home is probably worth about $150,000. They'd like to sell by owner and save the commission but they know everyone wants to negotiate a little bit so they price it at $155,000. Prospective home buyers know the neighborhood very well and think it's a little high so they don't bother to see the home. The homeowner gets frustrated after a few weeks and lists it with a real estate agent. They decide that to cover the commission, they'll raise to $158,000. A buyer whose agent knows the fair market value offers $149,000 which the homeowner knows is right at fair market value. They accept the offer and after paying commissions, they net $138,570.
Unfortunately, this scenario | happens all the time. Do you think the homeowner who didn't want to price by-owner at $149,000, regrets his decision after netting $138,570?
Utilizing FSBO Math correctly, the buyer should have started at $149,000 - fair market value! Keeping in mind that buyers of by-owner homes typically offer closer to asking price than do buyers of agent-listed homes, let's just say the seller received and accepted an offer of $147,500. Taking out our marketing costs of $595, the homeowner would have netted $146,900 - a difference of $8,330.00.
Another concern when pricing your home without professional assistance is that sellers can easily research the prices of homes currently listed in the area but what they can't easily find is the actual sales prices which are always lower than listed prices! This is why we do a comparative market analysis for every client because that information is valuable!
Even with professional advice, pricing can be tricky. We advice clients to be careful when getting pricing advice from real estate agents. If three real estate agents come out to give advice on pricing, it's human nature to choose the agent who compliments your home and discusses a higher sales price even though the agent who is honest about some of your home's disadvantages and discusses a lower sales price, is probably more more realistic and may sell your home quicker and without a price reduction. The first few weeks that your home goes on the market are critical. If you're overpriced, you'll miss that opportunity to go on the market with people thinking, "Here's a new home and it's priced right. We'd better act quickly." Wait a few months, reduce the pricing and the thinking may be, "Well, it's been listed for a long time. There may be a reason why it hasn't sold. I guess there's no rush to see it."
FSBO math is simply being sure to factor in your savings by not paying commissions, and to keep that in mind when pricing your home by-owner. We recommend starting at fair market value. Start at the right price, using FSBO math, and you'll come out ahead.
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