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Real Estate Agents & Pricing Your Property

How will you select a Real Estate Agent?

Services and Marketing Plan? - or - Indicated market price?

A Real Estate Agent has no control over the market, only the marketing plan. Never select a Real Estate Agent based on price!

Select a Real Estate Agent based on criteria specific to the company, the competence of the person, and the services provided.  Never base your choice on price.  A Real Estate Agent has no control over market conditions.  It would be wiser to select a Real Estate Agent first, then discuss price.  Don't encourage or allow agents to 'bid up' the price to get your listing.  True professionals will give you candid feedback and factual information so you can price within the market.

My Role in Pricing Your Property

- There is no 'exact price' for real estate
- I do not tell you what your home is "worth"
- The market determines value...we together determine the price.
- I bring the market...the market brings your price
- I will show you a range of prices being paid for homes in your area
- You determine the price based on factors you control:

1. Marketing time
2. Financing alternatives provided
3. Condition
4. Exposure methods

Importance of Proper Pricing

1. Faster sale
2. Less inconvenience
3. Exposure to more prospects
4. Increased sales person response
5. Better response from advertising and sign calls
6. Attracts 'cleaner' financing
7. Attracts higher offers
8. Means MORE money to sellers
9. Avoids being 'shopworn'

Principles of Evaluation

1.  Cost - The amount actually paid for a property plus any capital improvements made since the purchase.
2.  Price - The stated amount an owner is willing to accept for a property.
3.  Value - The amount a buyer is willing to pay given a certain set of circumstances.
4.  Market Value - The amount that will bring a sale between a willing buyer and a willing seller.  It is based on the history of similar properties recently sold in the area.
5.  Regression & Progression - The effect that surrounding home sizes have on the value of a subject property.  Regression is the decrease in value when surrounded by smaller or inferior homes. Progression is the increase when surrounded by larger or superior homes.
6.  Substitution - Substitution refers to the actual value of an amenity.  Value is determined not by the cost invested in a property, but by the value derived from it.

History of an Overpriced Home

By the time an overpriced home is finally reduced to the market it may be too 'aged' for buyers to offer full price.  Have you ever asked how long a home has been on the market?  What conclusion do you draw?

"But we have time"

At some percentage over market, no reasonable amount of time will produce a sale.  Even when priced right at the market it may require a month of exposure.

Reasons for Overpricing

1. Over improvement - Improvements should be made for enjoyment, not just resale. You cannot add an item to a home, select it to your style, use it, then expect a buyer to pay the original cost.
2.  Need - An owner's need for money does not increase the value of the home.
3.  Buying in higher priced area - Values are location specific. High values in the destination do not increase the value of the existing home.
4.  Original purchase price high - Chances are you paid market value. It's not a price that was too high, but a market that has experienced subsequent change.
5.  Lack factual data - Base your opinion of value on recent documented sale prices.
6.  Bargaining room - Buyers may offer low, but they will do that at ANY price. It is easier to negotiate up to fair market value than to an inflated price.
7.  Move isn't necessary - Even if the move isn't urgent, it is important to price correctly to preserve your marketing opportunities when the move becomes urgent.
8. Corporate buyout - Third party companies purchase thousands of homes a year so the offer you receive is usually market value. Market your home very close to that price.

"Couldn't we try for a couple of weeks?"

The majority of prospect activity on a new listing occurs in the early period of marketing.  This happens because Real Estate Agents maintain an inventory of active prospects that have been cultivated over time.  When a home is newly listed, Real Estate Agents arrange for them to see it.  Once this active group has seen the property, showing activity decreases to only those buyers new to the market.  For this reason, it is important that sellers have their home in the best condition and at the best price when first exposed to the market.

Questions to help you analyze your pricing strategy:

Is the local market rising, falling or staying even?
Is my opinion of value based on the actual neighborhood sale prices?
How many homes in this area are competing against mine right now? How does mine compare?
Have any neighboring homes been on the market too long? Why?
Is my home consistent with, larger or smaller than the surrounding area homes?
Which improvements have I made since purchase that will actually increase value?  Which improvements won't?
Are my financial needs influencing my asking price?
Is my original purchase price influencing my asking price?
Am I willing to price right and stand firm?
What is my gain by buying up in the present market?
Are the benefits of moving important enough to price my home at the market?

Tony Meier Real Estate Services, Inc.
EastsideHomes.com
Windermere Real Estate/SCA
16261 Redmond Way
Redmond WA 98052
Direct (425) 466-1000

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