I often meet with homeowners that want to know "How much do you think my house is worth" and they typically will also ask "How is the market". These are great questions. Homeowners will often begin to ask these questions because they are considering making a move and trying to test the water.
When you are ready to sell your house it is very important to get an active Realtor that knows the market, understands where the market is and most important knows where the market is going. I always say a good rule of thumb if the market for your home is $500,000 it is always better to be in front of the market rather then behind it. Let me explain, let's suppose 2 similar houses with similar upgrades with a fair market value of $500,000. Seller #1 prices his house to sell and lists his home for $475,000. Seller #2 wants to get every penny out of his house plus he wants to leave room for a buyer to negotiate him down because know one is going to pay full price right? So Seller #2 lists his home for $525,000. So what happens ? Let's consider they both are identical and are right next door to each other. Does Seller #2 home sell quicker for more money?
Studies have shown that what typically happens is Seller #1 home sells within the first 2-3 weeks. It uses the overpriced neighbors listing as leverage and not only that but because of the over pricing of Seller #2 home, it actually creates more value in the eyes of the buyer which in return causes multiple offers and ends up selling for $505,000.
So what happens to Seller #2 home? It just sits there and gets looked over and after a few price reductions and sitting on the market for 5 months it finally sells for $493,000. That's good right? I mean only $7000 under $500,000 isn't bad. Well lets look at the big picture. They also had to make 5 more mortgage payments at $2500 a month which puts them at $12,500 . On top of that the neighbor got $505,000 so they are actually ended up losing $24,500 because they overpriced their home. On top of that but now they didn't net as much as they had hoped since they assumed it would sell around $515,000 so now they don't net as much. So they have to go back to the house they were buying and try to renegotiate because they didn't take as much as they thought they were going to be making when they put the bid on the new house. Well the seller of that new house isn't happen and won't renegotiate so they actually have to come out of pocket with the additional money to make up the difference. In the end it ends up costing them over $40,000 and time they can't get back.
So if you want to get the most amount of money for your house, price it 5% in front of where the market is to create value and drive traffic.
I'll be going over what do to if you keep getting low ball offers how to start to generate offers at or above asking price.
If you have any questions feel free to call 626-343-4128 or 909-294-6799 or you can email me at sethrowlands@yahoo.com
Thank you
Seth Rowlands
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