For you to understand how much to offer for a home you ’re interested in, it’s important for you to know how sellers price their homes.
Here are 4 common strategies you’ll start to recognize when you begin to view homes:
Every seller wants to realize the most amount of money they can for their home, and real estate agents know this. If more than one agent is competing for the listing, an easy way to win the battle is to quote the seller an overinflated price. This is done far too often, with many homes that are priced 10- 20% over their true market value.
Unfortunately, this is not in the seller’s best interest, because in most cases the market won’t be fooled. As a result, the home could languish on the market for months, leaving the seller with a couple of important draw – backs:
- The home is likely to be labeled as a “troubled” house by other agents, leading to a lower than fair market price when an offer is finally made
- The seller has been greatly inconvenienced with having to constantly have their home in “showing” condition… for nothing.
About 3/4 of the homes on the market are 5-10% overpriced. These homes will also sit on the market longer than they should. There is usually one of two factors at play here:
- Either the seller believes in their heart of hearts that their home is really worth this much despite what the market has indicated (after all, there’s a lot of emotion caught up in this issue), OR
- They’ve left some room for negotiating. Either way, this strategy will cost the seller both in terms of time on the market and ultimate price received.
Another Blog to Read: Now Sellers Can Choose Their Commission Rate
Priced Correctly at Market Value
Some sellers understand that real estate is part of the capitalistic system of supply and demand and will carefully and realistically price their homes based on a thorough analysis of other homes on the market. These competitively priced homes usually sell with – in a reasonable time-frame and very close to the asking price.
Priced Below the Fair Market Value
Some sellers are motivated by a quick sale. These homes attract multiple offers and sell fast – usually in a few days – at, or above, the asking price.