Fair Market Value - The Karma of Overpriced Listings
Selling a home in a timely manner means different things to different owners, but all sellers want to net as much as possible and it all boils down to perception, appeal and "fair market value"
It's always been funny to me, Westerners believe the definition of Karma is loosely "what comes around goes around" but that actual meaning of Karma is simply "The future one creates for oneself".
When it comes to pricing a home, this concept is better than a real-life crystal ball at what will happen if your home isn't priced correctly.
I'll spell it out for you, how it will play out, exactly what will happen but also what sellers can do to land in the ballpark of their goals.
The Karma ....
- An agent, not knowing better or against their better judgement is going to take the overpriced listing, hoping they can talk the seller down.
- It will sit on the market with next to no interest, and receive what the seller thinks are low ball offers, but more likely offers in line with "what the market will bear".
- The seller won't concede to a price reduction, or if they do, it's probably too late as buyers interested in fair market value homes in that community have moved on to other properties.
- If there is a drastic price cut, buyers begin to wonder what's wrong with the property, a little interest may be generated but nothing substantial or worthwhile.
- The seller fires the listing agent, and chooses another to market the property believing the previous agent didn't market well enough.
- Rinse and repeat.
- Several more months go by, and again the listing agent is fired for "not dong their job", but the seller finally listens to listing agent number three and the home sells at a reduced price.
- The seller is unhappy, didn't make their target net, and took much longer to sell the property than was hoped for.
My personal advice to agents is to not take overpriced listings from adamant sellers that won't listen to what the local market is saying. That doesn't mean the home can be sold for "the ballpark" of what the seller wants, but there is work to be done. Here's where a bit of humility and being coach able goes a long way towards success.
What Sellers Can Do to Meet Their Net Goals:
Easier in a seller's market, much harder in a buyer's market, there are several things that can be done to reach a reasonable target net from the sale of a property.
There are three areas of focus to accomplish this; home improvements for house value, proper home staging and dynamic marketing.
Take a good look at what is in disrepair and outdated, these will be your home improvement projects. Keep in mind, a move-in-condition home that's up-to-date can command much better offers than something that looks to the buyer like it's going to need any considerable work or upgrades in the near future.
Home Improvement for House Value
- Brokers Tell All: 10 Ways to Boost Your Home Value - This Old House. These ideas won't cost you a lot of money, but will provide a return on value.
- 100 DIY Home Improvement Projects Under $100 - The Keadle Group. These simple DIY projects will really help increase the perceived value of your home.
- 30 Tips for Increasing Your Home's Value - HGTV's Remodel - Experts give you some really popular suggestions for home improvement prior to selling.
Home Staging to Sell Faster and For More
Properly staged homes do sell faster and for more and in some cases much more. Taking the home improvement advice above will raise your house value significantly, and then adding proper home staging can boost your final sale in some cases another 5% or more.
- Home Staging Sells Faster and For More - Realtor.org. Realtors cough up stats on home sales with staging vs non-staged homes.
- Home Staging to Sell- Techniques That Work - Houzz.com. Get up to speed on the best ways to appeal to potential buyers through accessories, furniture, colors and more.
Dynamic Marketing to the Largest Pool of Buyers
This is one of the key elements to achieving your net goals, but can't ignore the other two points on home improvements and staging. Your listing agent should have a large, active social media audience, have syndicated advertising and a detailed plan of how they are going to get your property standing head and shoulders above the competition.
Simply listing a property in the MLS is not nearly enough anymore.
There should be plentiful professional pictures of your property, a virtual tour in many cases. Facebook, Twitter and other social media should be heavily used along with syndicated advertising that places your listing on scores of popular real estate sites, not just one or two. Just listed post cards, open houses and many other elements such as these come together to create a dynamic marketing plan.
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