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1.   The Lane Realty Advantage         
2.  
3 
Thoughts on Pricing
  3.1 The Facts of (Real Estate) Life
  3.2 Overpricing
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top3.1 The Facts of (Real Estate) Life

THE FACTS OF (REAL ESTATE) LIFE (For Home Sellers) - Joseph P Klock

I

Your house cannot sell for a penny more than the BEST OFFER OBTAINABLE from the BEST BUYER AVAILABLE in the current market.

Recent sales of similar properties have historical value, but the “best buyer” we are looking for is to be found in the present market place, not in the past record books. Our job is to find that buyer and obtain his or her highest possible offer. No house in history has ever sold for more than the best offer obtainable from the best buyer available in the current market.

II

The only way to determine the true value of a house is to thoroughly TEST THE MARKET and aggressively CHALLENGE THE COMPETITION.

Appraisals and expert opinions can be helpful in establishing a listing price for your home, but its ultimate selling price will be determined by the prospective buyers whom we are able to contact. Buyers will compare your home with other offerings in their price range and make judgements. It is critical that your home be competitive in price and appeal with the other options that these prospective buyers will be considering.

III

Testing a BIGGER MARKET and a BETTER MARKET with GREATER SKILL yields a better price.

It is axiomatic that the larger the market you can reach and the higher the quality of that market, the better the price you will realise. It stands to reason, for example, that sellers working alone can expose their home only to the small segment of the market that can be reached by a single sign and limited advertising. It is also important to note that, in spite of the multiple signs and substantial sums of money spent on advertising, these two sources typically account for only about 30% of the actual buyers attracted to a typical real estate office. The other 70% of the market is represented by the marketing activities of your Real Estate team.

It is also well-established that the buyers most ready, willing and able to act are almost invariably availing themselves of the services of real estate professionals.

Finally, the best buyer, unless he or she is being handled by a skilled professional, can often come and go without making a commitment.

IV

An appropriate listing price will, immediately and consistently, ATTRACT ATTENTION and GENERATE ACTIVITY.

The process of TESTING THE MARKET need not be a lengthy one, regardless of marketing conditions. As previously stated, buyers do comparison shopping and act accordingly. When a property is first exposed to the market, both buyers and salespeople make “instant evaluations” of the offering and, if it compares favourably with what they have already seen, it will not only attract their attention, but stimulate them to inquire for details and arrange appointments to inspect.

Your listing price must be realistic enough to immediately attract this attention from buyers and salespeople. If it does not do so, while competitive properties are attracting attention and generating activity, you have a clear indication that your listing price is not meeting the acid test of the market place, regardless of economic conditions or other external considerations.

V

A home that is PRICED REALISTICALLY and MARKETED EFFECTIVELY will always sell!

There’s an old saying that the three most important works in real estate are “location, location and location.” Like a lot of old sayings, it is simply untrue. No matter how poor the location might be, there is a price at which it will sell, and that price will be determined by testing the market.

The three most important words in real estate, therefore, are PRICE, EXPERTISE and MARKETING.

Unless the price is competitive, the chances of a home selling are slim to none; and even realistic pricing should be supported by the thorough testing of the market and aggressive challenging of the competition that can best be performed only by skilled professionals.

BOTTOM LINE #1: When realistic pricing is combined with effective marketing, there is a buyer for everything and, given these conditions, any home can be sold in any market.

BOTTOM LINE #2: Homes that languish unsold on the market for months and even years are ignoring these “facts of real estate life,” often causing unnecessary inconvenience and financial damage to their owners and agents.

The market is not always kind, but it is never wrong... and those who believe otherwise pay a heavy price for ignoring these “facts of real estate life.”

Visit Joe Klock at: http://www.joeklock.com/

top3.2 Overpricing

OVERPRICING - ADVICE FROM AN AMERICAN EXPERT

The following article appears on the Web Site of Jay Burnham of Massachusetts USA. Visit Jay at http://www.northshorerealestate.com and check out his other articles for sellers.

Sellers often wonder why buyers don't make offers. Some sellers find it hard to believe that the source of the problem is that their list price is too high. Buyers can make lower offers, right? They can, but in most cases serious buyers don't make offers on homes that are priced too high for the market.

It's easy to understand why buyers don't offer on overpriced listings when the market is glutted with inventory. With plenty of homes to choose from, why would a buyer waste time making an offer on a property that's listed above the competition?

In low-inventory markets, however, the reasons why overpriced listings don't sell is more complex. Buying and selling homes is an emotional experience. Psychological factors come into play. Some buyers shy away from making a low offer on a listing because they don't want to offend the seller. This is particularly so if the buyers have a serious interest in the property. In this case, they often prefer to wait for a price reduction before making an offer.

Sellers often think that if buyers love their home enough, they'll pay more for it. This is true to a point. But few buyers, if any, are willing to pay more than the fair market price. A home is worth what the market will bear. It's not necessarily worth what the sellers want. Buyers usually know market value better than sellers do. Sellers may look at a few houses before listing theirs for sale. But buyers frequently look at as many as 25 or more homes by the time they decide to make an offer on one. So it's difficult, if not impossible, to convince today's cost-conscious, consumer-savvy buyers to pay more than market value for a home.

Sellers who put an unrealistic price on their home send a message to real estate agents and prospective buyers: here's an unrealistic seller who may be difficult to work with. Most home buyers today are busy and don't have time to waste with unreasonable sellers. This is why most buyers would rather wait for a price reduction before starting to negotiate.

HERE'S A TIP: Sellers who discover they're priced too high should reduce their price as soon as possible. A home is most marketable when it's new on the market. If it doesn't sell within the first month or so because the price is too high, agents and their buyers lose interest.

Sellers may be reluctant to drop their asking price when the property is new on the market. But keeping your home on the market at an unrealistic price could result in a lower selling price when it ultimately does sell. If you lower the price when the listing is relatively new, you have a chance at keeping the marketing momentum going.

New listings stay fresh in agents’ minds for the first few weeks they're on the market. This is why lowering the price on an overpriced listing early in the marketing campaign, while the property is still fresh in the agents' minds, makes sense. After a listing has been around for a few months, a price reduction won't have the same impact because many agents will have forgotten about the property.

IN CONCLUSION: Not only do buyers not like to offer on overpriced listings, agents don't like to show them. Put yourself in the agent's shoes. If you're working with buyers who only want to see well-priced listings that suit their needs, wouldn't you risk losing credibility if you took them to see properties that were overpriced?

...........Jay Burnham

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Lane Realty
For Service With a Smile
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North Tamborine, Queensland, Australia 4272
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Phone61-7-55451800 Fax 61-7-55452747 emailinfo@lanerealty.com.au

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