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By Mike Mason
Special to the Village News 

Home sellers set their asking price by one of four strategies


Last updated 3/5/2018 at 2:13pm

When first deciding to sell a home, setting the asking price is one of the most important decisions sellers will make. Price is the first thing for which buyers look, followed by looking for the best value within that price range. The asking price is often a home’s first impression, and to realize the most money possible from a home’s sale, it is imperative that the seller makes a good first impression. It is not as easy as it sounds, the pricing strategy should not be taken lightly. Pricing a home too high can be as costly to a home seller as pricing it too low. Taking a look at what homes in the neighborhood have sold for is only a small part of the process, and it is not nearly enough on its own to help a seller make the best decision. So here are some suggestions to help sellers understand some important factors about pricing strategy and sell their home for the price they want.

First, pricing strategy starts with good information.

Before beginning to know what a home is worth, homeowners should do some research, bearing in mind that an analysis of what homes have recently sold for in the neighborhood is not enough to help properly price a home. A quick scan up and down the street at the prices of homes that have recently sold will give a seller place to start; however, it is not nearly enough to base an entire pricing strategy upon. It is important to understand how buyers look for a home. Instead, think about how the original home search was conducted. Most likely, the seller did not confine their search to a single neighborhood, but perhaps they looked at different neighborhoods or towns in order to find a home that best matched their needs and desires. The prospective buyers who will be viewing the home will conduct their searches in a similar manner. That means they will be comparing the home to brand-new development homes and to homes more than 20 years old. They will also consider locations such as homes in established neighborhoods, the middle of town, the suburbs or country estate properties. Each home will have a different look and feel, and it’s quite possible that a prospective buyer might consider all of these variables in the search for a home. When selling a home, sellers are not just competing with the home around the corner but also with all homes in other areas which have the same basic characteristics: the number of rooms, the overall living space and more.

For buyers to understand how much to offer for a home, it’s important to know how sellers price their homes. Here are four common strategies used that buyers will recognize when they begin to view homes.

First, a home is clearly overpriced.

Every seller wants to realize the most amount of money they can for their home, and real estate agents know it. If more than one agent is competing for a listing, an easy way to win the battle is to overinflate the value of the home. It is done far too often, with many homes that are priced 10-20 percent over their true market value. It is not in anyone’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 drawbacks.

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 or the seller has been greatly inconvenienced by having to constantly have their home in “showing” condition for nothing. These homes often expire off the market, forcing the seller to go through the listing process all over again.

Next, a home is somewhat overpriced.

Several homes on the market are 5-10 percent 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 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 the buyer has left some room for negotiating. Either way, this strategy will cost the seller both in terms of time on the market and in the ultimate price received.

A home is 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 within a reasonable time-frame and very close to the asking price.

Lastly, a home is 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. Sellers should be cautious to ensure the agent suggesting this method is doing so with their best interest in mind.

Call (951) 296-8887 and get the information needed to make an informed, educated sound decision.

Questions regarding available inventory and/or other real estate matters please contact, Mike Mason, Realtor and Broker/Owner of MASON Real Estate. LIC: 01483044, Temecula Valley resident for more than 30 years, Board of Director (2011-2017) Southwest Riverside County Association of Realtors.


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