Importance of Pricing
Understanding Market Value
Market-sensitive pricing can be the key to maximum market exposure and, ultimately, a satisfactory sale. The existing pool of prospective buyers determines a property’s value, based on:
- Location, design, amenities, and condition.
- Availability of comparable (competing) properties.
- Economic conditions that affect real property transactions
- Factors that have little or no influence on the market value of a house include:
- The price the seller originally paid for the property.
- The seller’s expected net proceeds.
- The amount spent on improvements
- The impact of accurate pricing:
- Properties priced within the market range generate more showings and offers and sell in a shorter period of time.
- Properties priced too high have a difficult time selling.
- Determining A market-sensitive Price
- An impartial evaluation of market activity is the most effective way to estimate a property’s potential selling price. A Comparative Market Analysis considers similar properties:
- Have sold in the recent past – This shows us what buyers in this market have actually paid for properties similar to yours.
- Are currently on the market – These are properties that will be competing with yours for the attention of available buyers.
- Failed to sell – Understanding why these properties did not sell can help avoid disappointment in the marketing of your property
- The Dangers of Over-Pricing
- Fewer buyers are attracted, and fewer offers received.
- Marketing time is prolonged, and initial marketing momentum is lost.
- The property attracts “lookers” and helps competing houses look better by comparison.
- If a property does sell above true market value, it may not appraise, and the buyers may not be able to secure a loan. The property may eventually sell below market value.