Seller Resources - Articles

Deciding to sell your home is a big deal, and coming to a consensus on the list price can be the first big hurdle. Here, I answer just a few questions about pricing and selling a home.

You can always go to www.SellingSCVHome.com

What is the difference between list and sales prices?
The list price is how much a house is advertised for and is usually only an estimate of what a seller would like to get for the property. The sales price is the amount a property actually sells for. It may be the same as the listing price, or higher or lower, depending on how accurately the property was originally priced and on market conditions. If you are a seller, you may need to adjust the listing price if there have been no offers within the first few months of the property's listing period.

What is the difference between market value and appraised value?
The appraised value of a house is a certified appraiser's opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $200 to $300. Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker. Either an appraisal or a comparative market analysis is the most accurate way to determine what your home is worth.

What are the two most important factors when selling a home?
Price and condition are the two most important factors in selling a homein any market. The first step is to price your home correctly. Use comparative sales information from your agent, or pay for a professional appraiser (usually $200 to $300), to objectively evaluate your home's worth. Second, go through the house and repair any obvious cosmetic defects that could deter a buyer. In a down market, you may have to consider lowering your price and/or making a major repair, such as replacing the roof remodeling bathrooms or kitchens, in order to lure a buyer. 

What is a Comparative Market Analysis? 

A real estate agent will provide you with a CMA, which is a compilation of recent sales from your area. It takes into consideration home details, days on the market, and final sale price.

Agents provide comps to potential clients, and they may not even need to step foot in your home. You might also consider hiring an independent appraiser. For a few hundred dollars, they can give you a fair market value for your home.

Comparable properties will include:

  • Be within ¼ to ½ of a mile from your home.
  • Have been listed within the last 3 months.
  • Be roughly the same age as your property.
  • Have square footage within 10 percent of yours. So, if your home is 1,500 square feet, you should look at homes between 1,350 and 1,650 square feet.

A real estate agent will provide you with a CMA, which is a compilation of recent sales from your area. It takes into consideration home details, days on the market, and final sale price.

Agents provide comps to potential clients, and they may not even need to step foot in your home. You might also consider hiring an independent appraiser. For a few hundred dollars, they can give you a fair market value for your home.

Comparable properties will include:

  • Be within ¼ to ½ of a mile from your home.
  • Have been listed within the last 3 months.
  • Be roughly the same age as your property.
  • Have square footage within 10 percent of yours. So, if your home is 1,500 square feet, you should look at homes between 1,350 and 1,650 square feet.
Don't let your asking price lump you in with all the competition!
Ever heard of price banding? It’s the practice of looking over current inventory in your neighborhood and finding a less crowded price point. Prices tend to get bunched up as sellers try to price their homes competitively. For example, if there are four homes in your neighborhood priced between $274,000 and $276,000, and the next set of homes start at $290,000 and up, you should take advantage of the wide open $280,000 price band.

Price for online search engines 
Consider the price range your home will fall into on popular online real estate websites. Most buyers have a price range they are considering or can afford. A buyer looking at homes in the $280,000 to $300,000 range will likely not see your home if it’s listed at $305,000. But, if you choose a home listing price of $300,000, it’ll show up in their search results at the $280,000 to $300,000 price range and the $300,000 to $320,000 price range--and they just might end up being your buyer.

Avoid Obscure Pricing
Whether at the grocery store or in a home sale, there’s a proven psychology that items priced just under a “century” number (meaning a nice, round number) are more attractive to buyers — think $9.95 instead of $10, $19.99 instead of $20, and so on. For whatever reason, your $299,999 home might seem more approachable than if it were priced at $300,000. However, it has been said that pricing a house at a random and obscure number (like $123,456) is distracting to buyers and gives a bad impression of you, the seller.

Put yourself in the buyers shoes 
It’s hard to put aside your emotional attachment to your home, but when selling your home, it’s a must. Look around at what else is selling around the same price. Objectively, are these homes worth more or less than yours? How bad do you want to get sold? You may think your home is worth $20,000 more than the last sale, but why would I buyer pay more when the homes are exact matches in their heads?

Don't hesitate to cut the price after listing 
Even with the best research, sometimes you’ll come to the conclusion that you’ve listed too high. Luckily, it’s not unusual to see price cuts. In fact, 60 percent of sellers change their price at least once. The key is to recognize quickly that you’ve overpriced, and make an accurate adjustment.

Avoid the temptation of making a few little pricing tweaks over time. Older listings simply aren’t as attractive to buyers, and your goal is to sell quickly. It’s always better to make one big price correction up front.

How to price for the current market 

To learn how to sell your house for the best price, keep in mind the following factors:

  • Seasonality: In the majority of the country, spring is considered the best time to sell a home — the weather is improving and families want to move during the summer break from school. Fall is considered second-best, as most people are back in town from summer vacations. Winter is the slowest season, not only because of bad weather, but because people are busy with the holiday season. Of course, the very best time varies in southern California every year. 
  • Inventory: In Economics 101, we were taught the basics of supply and demand, and it definitely applies to real estate. If your home is one of 20 for sale in your neighborhood, you’ll have a hard time getting the price you want, since supply outweighs demand. But, if it’s a hot market and you’re one of just a few homes available in your area, you may be able to get your asking price, or even higher.
    • Buyer’s market: In a buyer’s market, you need to be priced slightly lower than the competition, because there are more homes for sale than there are buyers in the market.
    • Seller’s market: In a seller’s market, you can add about 10 percent to a comparable sale, since inventory is limited and buyers are competing for fewer homes.  
    • Neutral market: In a neutral real estate market, there’s a good balance between the number of buyers and the number of homes for sale. In this market, you’ll want to keep an eye on nearby comparables to make sure your pricing is similar.

How does someone sell a slow mover?
Even in a down market, real estate experts say that price and condition are the two most important factors in selling a home. If you are selling in a slow market, your first step would be to lower your price. Also, go through the house and see if there are cosmetic defects that you missed and can be repaired. Secondly, you need to make sure that the home is getting the exposure it deserves through open houses, broker open houses, advertising, good signage, and listings on the local multiple listing service (MLS) and on the Internet. Another option is to pull your house off the market and wait for the market to improve. Finally, if you who have no equity in the house, and are forced to sell because of a divorce or financial considerations, you could discuss a short sale or a deed-in-lieu-of- foreclosure with your lender. A short sale is when the seller finds a buyer for a price that is below the mortgage amount and negotiates the difference with the lender. In a deed-in-lieu-of-foreclosure situation, the lender agrees to take the house back without instituting foreclosure proceedings. The latter are radical options. Your simplest, and in many cases most effective, option is to lower the price.

How is the price set?
It's very important to price your home according to current market conditions. Because the real estate market is continually changing, and market fluctuations have an effect on property values, it's imperative to select your list price based on the most recent comparable sales in your neighborhood. A so-called comparative market analysis provides the background data upon which to base your list-price decision. When you prepare to sell and are interviewing agents, study each agent's comparable sales report (the data should be no more than three months old).


What about preparing your home for sale?
Doing whatever you can to put your house's best face forward is very important if you want to get close to your asking price or sell as quickly as possible. Short of spending a lot of money, here are several ideas for making your home show better:
* Sweep the sidewalk, mow the lawn, prune the bushes, weed the garden and clean debris from the yard.
* Clean the windows (both inside and out) and make sure the paint is not chipped or flaking. And speaking of paint, if your home was built before 1978, new federal law gives a buyer the right to request a lead inspection. If you think you might have some problems, do the inspection yourself beforehand and make any fixes you can.
* Be sure that the doorbell works.
* Clean and spruce up all rooms, furnishings, floors, walls and ceilings. It's especially important that the bathroom and kitchen are spotless.
* Organize closets.
* Make sure the basic appliances and fixtures work. Get rid of leaky faucets and frayed cords.
* Make sure the house smells good: from an apple pie, cookies baking or spaghetti sauce simmering on the stove. Hide the kitty litter.
* Put vases of fresh flowers throughout the house.
* Having pleasant background music playing in the background also will help set your stage.

Where do I get information on housing market stats?
A real estate agent is a good source for finding out the status of the local housing market. Feel free to contact me at any time. 


Wendy Gundry
Wendy Gundry
Realtor
27720 Dickason Dr. Santa Clarita CA 91355