If you're selling your house, one of the first steps you'll take is setting an asking price, a maneuver that requires the ability to find the perfect balance between attracting solid offers and ultimately receiving top dollar.
- Upgrades have been added. While many home improvements will help you recoup a good chunk of your investment, it won't give you 100 percent of what you paid. Also, the more personal the improvement—a swimming pool, a sunroom, purple floors—the less likely it will be viewed favorably by potential buyers.
- The need for money.
- You're moving to a higher-priced area.
- The original purchase price was too high.
- The seller lacks factual comparable sales to prove what the market value is.
- The seller wants bargaining room (listing more than 1-3 percent above market value actually reduces bargaining power).
- An unnecessary move, so you're not motivated.
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The housing market is finally recovering. Sales are up and so are prices. That means good news for anyone thinking about selling. However, we must be careful not to fall into the trap of over exuberance. Pricing a house incorrectly when it is first listed for sale can be a huge mistake.
Ken H. Johnson, Ph.D. at Florida International University and Editor of the Journal of Housing Research, referring to previous research by John Knight, revealed:
“Sellers as well as Brokers/Agents should therefore be aware of the critical necessity of getting the price correct from the start. Sellers wanting to over list will ultimately take longer to sell and will sell their property for less, on average, according to Knight. Brokers/Agents’ desire to take a listing and get the price right later will ultimately lead to their working harder according to Knight, and they are not doing their sellers any favors.”
Why Are We Bringing This Issue Up Now?
Recent price increases seen in housing have been the result of a lack of salable housing inventory across the country. This inventory challenge is beginning to correct itself and many believe that price increases will begin to taper off.
Bill McBride, the author of the renowned economic blog Calculated Risk, explains:
“I think that inventory bottomed earlier this year, and that the NAR will report a year-over-year increase in inventory very soon (probably for September). As more inventory comes on the market, buyer urgency will wane and price increases will slow and even decline seasonally in many areas this winter.”
If you are putting your house on the market, make sure you consult with a real estate professional before establishing your price. That is the only way you can guarantee getting top dollar in this market.