In a perfect world, the value of your home would be exactly what you think or need it to be. The hard truth however, is that sellers do not determine the market value of their property. Value relates to what something is really worth, which is what one could expect to receive on the open market. It doesn’t matter what the value was three years ago, or last year, or even last month for that matter. In real estate terms, market value is the price at which a particular house, in its current condition, should sell for within 30 to 90 days. By focusing on what the value of the home is today, in today’s marketplace and market conditions, you will be strategically placing yourself in the best possible position. Don’t get hung up on a former value, and keep in mind that values are relative. If you are selling when values are low, then you will most likely also be purchasing when values are low. Conversely if you sell higher, you will likely be buying higher.
The Consequences of Overpricing
While the strategy of overpricing your property, thinking you can reduce the price later, might make sense at first glance, it seldom works. In fact sellers who overprice their property, even by as little as 10% above market value, often end up getting less than they would have if they priced it right from the start. Here are some of the reasons why:
Prospective buyers, seeing your home on the market for a long time, will begin to feel that there is something wrong with your home.
Reducing the price after buyers have begun to perceive your home as a “stale” listing will not generate nearly as much interest as if you’d priced it properly from the start.
An overpriced home, still sitting on the market beyond the average selling time, usually leads to a lower sales price. In the end, by chasing the market you’ll get less than you would have if it had been properly priced from day 1.
You will experience frustration, as well as wasted time and energy.
A bank appraisal is required to finance a home. No lender will finance a home at a price higher than market value.
Most experts believe home prices are still falling. Housing has not rebounded. In a declining market, more time on the market means fewer dollars in your pocket. *According to data published on September 16, 2010 by Moody’s Analytics, housing will backslide into a “double dip correction”. Values are expected to drop another 8%. A strong rebound is not expected.
If you are making a monthly mortgage payment, you are losing hundreds, maybe even thousands of dollars in interest every month.
The bottom line is that well kept homes that are properly priced in the beginning always get you the fastest sale for the best price!
