Asheville Real Estate: 10 Steps to Selling Your House: Step 2 Pricing Strategy

• Time
  Time is not on your side when it comes to real estate. Although many factors influence the outcome, perhaps time is the biggest determinant in whether or not you see a profit and how much you profit. Studies show that the longer a house stays on the market, the less likely it is to sell for the original asking price. Therefore, if your goal is to make money, think about a price that will encourage buyer activity (read: fair market value).
  
• Value vs. Cost
  Pricing your home to sell in a timely fashion requires some objectivity. It’s important that you not confuse value with cost — in other words, how much you value your home versus what buyers are willing to pay for it. Don’t place too much emphasis on home improvements when calculating your price, because buyers may not share your taste. For instance, not everyone wants hardwood floors or granite countertops.
  
• Keep it simple
  Because time is of the essence, make it easy for the buyers. Remain flexible on when your agent can schedule showings. Also, avoid putting contingencies on the sale. Though a desirable move-in date makes for a smoother transition between homes, it could cause you to lose the sale altogether.

THe Basics in Pricing Your Home
Pricing decisions should be grounded in reality rather than wishful thinking. When the time comes to price your home for sale, you may be tempted to start with the price you paid for it, add a healthy markup and call it a day. Unfortunately, that strategy is unlikely to result in a true reflection of your home's market value. Here are six strategies to help you figure out how much your home is worth:

1. Abandon your personal point of view. How much will a ready, willing and able buyer be willing to pay for your home? Buyers don't care how much you paid for the home, how many memorable moments you and your family shared in the home, how much cash you need for the down-payment on your next home or how much time and money you've invested in your home's hardwood floors, fresh paint, lush landscaping or other improvements.

2. Get a couple of CMAs. Invite at least three real estate agents to visit your home and give you their opinion of its likely selling price. Ask for a "comparative market analysis" (CMA), which shows the prices of comparable recently sold homes, on-the-market homes and homes that were on the market, but weren't sold. The on-the-market homes are the "competition" for your home. Ask the agents why each home was included in the CMA and whether any other comparable homes were eliminated from the CMA. Price recommendations based on CMAs aren't gospel. Some agents will tell you to under-price your home in hope of sparking a bidding war. Others will suggest a flatteringly high price to "buy" your listing only to demand a price reduction a few weeks later. 

3. Do your own market research. Go to open houses in your neighborhood and try to make an impartial assessment of how those homes compare to yours in terms of location, size, amenities and condition. Assuming all the asking prices were the same, would you buy your home or someone else's?

4. Calculate the price per square foot. The average price per square foot for homes in your neighborhood shouldn't be the sole determinant of the asking price for your home, but it can be a useful starting point. Keep in mind that various methodologies can be used to calculate square footage.

5. Consider market conditions. Are home prices in your area trending upwards or downwards? Are homes selling quickly or languishing? Will your home be on the market in the spring home-buying season or the dead of winter? Are interest rates attractive? Is the economy hot or cold? Will you be selling in a buyer's market or a seller's market? Is the local job market strong or are employees fearful of staff reductions?

6. Sweeten the transaction terms. Some buyers have needs that go beyond the bottom line. If you're willing to close escrow quickly, you'll attract buyers who want to move in right away. If you can offer seller-financing, your home will appeal to buyers who need to stretch their financial resources. A lease-option can help first-timers who need down-payment assistance. The more creative and flexible you can be in meeting the buyer's needs, the more success you'll have in pricing your home to sell.

Set Your List Price

Setting the list price for your home involves evaluating various market conditions and financial factors.
During this phase of the home selling process, I can and will help you set your list price based on: Pricing considerations Comparable sales Market conditions Offering incentives Estimating net proceeds Pricing considerations In setting the list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:

If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have thought, "Bring me any offer. Frankly, I’d take less." But compared to other houses for sale, your home simply looks too expensive to be considered. If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.

TIP: Never say "asking" price, which implies you don't expect to get it.

Using comparable sales:

No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market. Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood like yours. As your REALTOR®, I can furnish data on sales figures for those "comps", and analyze them for a suggested listing price. The decision about how much to ask, though, is always yours.

The list of comparable sales I will bring as your REALTOR®, along with data about other houses in your neighborhood presently on the market, is used for a "Comparative Market Analysis (CMA)." To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices.

This CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. In addition, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed for sale and those currently pending sale. In a normal home sale, a CMA is probably enough to let you set a proper price. A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price, or if there is any other circumstance that makes it difficult to put a value on your home.

TIP: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report -- the kind that's complete with photos of the house and neighborhood, a map specifying the site, and floor plans is sufficient.

Consider market conditions:

A Comparative Market Analysis (CMA) often includes Days on the Market (DOM) for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.

As your REALTOR®, I can tell you whether your area is currently a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.

Your Money:

Make the most of your money. Our Asheville Real Estate Mortgage Center features information about banking, loans, insurance, taxes, investing and more.

Offering incentives:

Some sellers list at the rock-bottom price they'd really take, because they hate bargaining.  Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with me as your REALTOR® and work out a schedule in advance. If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers.

Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in. Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution. If you haven't had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be "to the broker who brings a successful offer before Christmas."

For Your Home:

Want to give your home a new look? Find advice and inspiration in our decorating section. Estimating net proceeds Once you’ve been given an estimate of market value by me as your REALTOR®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful as you start looking for another home to buy. From the estimated sales price, subtract: Payoff figure on your present loan(s) Broker's commission Any prepayment penalty on your mortgage Attorney's fees, if any Unpaid property taxes.

In addition, as your REALTOR®, I can tell you whether local customs or rules dictate that the buyer or seller to pay for the following items: Title insurance premium, Transfer taxes, Survey fees, Inspections and repairs for termites and the like, Recording fees, Homeowner Association transfer fees, and document preparation Home protection plan, Natural hazard disclosure report. As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. As your REALTOR®, I will assist you in estimating what your final closing costs will be.

Myths and Facts about Appraisals
Consumers tend to have some misconceptions about the appraisal process. You've no doubt already familiar with the concept of an appraisal. The idea is similar in many fields of business, as well in the realm of real estate valuations. Each property is unique, and the appraiser relies on his or her general expertise and specific research to arrive at an opinion of value. Appraisals are an infrequent experience for most consumers, who consequently tend to have some misconceptions about the process and the results.

Here are some myths and facts:

 
Myth: The primary purpose of an appraisal is to make sure the buyer doesn't pay too much for the house.
 
Fact: An appraisal provides valuable information for the buyer and the seller, but the appraiser's primary mission is to protect the lender. Lenders don't enjoy owning overpriced property any more than they relish lending money to irresponsible borrowers. That's why the appraisal takes place before the lender grants final approval of the buyer's loan.

Myth: Appraisers use a specific formula (e.g., price per square foot) to figure out exactly how much each home is worth.

Fact: Appraisers weigh the location of the home, its proximity to desirable schools and other public facilities, the size of the lot, the size and condition of the home itself and recent sales prices of comparable properties, among other factors.

Myth: Good housekeeping can improve a home's valuation. For Your Home Bring your home into the 21st century. For the latest in electronics, automation and great gadgets for your home, click here.

Fact: Appraisers aren't interested in dirty dishes or dusty dressers, but they do notice such signs of neglect as cracked walls, chipped paint, broken windows, torn carpets, damaging flooring and inoperable appliances.

Myth: Anyone who has a clipboard and business cards can be an appraiser.

Fact: Federal law requires states to establish minimum standards and licensing practices for real estate appraisers. In California, for example, trainees must take several courses, pass an examination and complete 2,000 hours of supervised experience.

Myth: Appraisers have no obligation to reveal home defects to buyers.

Fact: If the buyer is applying for a mortgage that will be insured by the Federal Housing Administration (FHA), the appraiser must survey the physical condition of the home and disclose potential problems to the buyer. No such obligation exists for non-FHA mortgages.

Myth: An appraisal is identical to a home inspection.

Fact: The new FHA disclosure requirement notwithstanding, an appraisal isn't a substitute for a professional home inspection. The appraiser formulates an opinion of the property's value for the lender, while the inspector educates the buyer about the condition of the home and its major components.

Myth: If the appraiser's opinion of value is lower than the purchase price, the buyer won't be able to purchase the home.

Fact: A transaction can sometimes survive a "low" appraisal if the seller reduces the purchase price, the buyer makes a hefty down-payment or a separate escrow account is set up to fund repairs that will increase the value of the home. On rare occasions, an appraiser will reconsider his or her opinion if new evidence supports a higher valuation.

In all these areas I can save you time and money by educating you on how to set the asking price for your home. I will create a comparative market analysis by taking into consideration the type of market you are in and recent sales of comparable properties. I will then guide you to the best fair market price that will help sell your house within the desired time frame. Usually, real estate agents have a better sense of market value than anyone else- including appraisers!

Remember: Buying and selling a luxury home or finding that special piece of Asheville Real Estate with Kathleen Blanchette, a fully licensed Keller-Williams Asheville Real Estate Broker and Realtor, is a comprehensive and thoroughly professional experience in buying and selling Asheville Real Estate throughout the Blueridge and Smokey Mountains, where efficiency, personal regard and concierge services are guaranteed every step of the way.  Keeping the Tradition of Integrity..., and a Reputation for Results! 

Whether its a North Carolina luxury homes on your own Private Mountain Estate in one of our uniquely designed plush Golfing Communities, Exclusive Gated Communities, Active Adult Communities, surrounding Lake Communities, or a great Condominium, Loft or Townhome, all of Greater Asheville and Hendersonville Luxury Homes are within reach with Kathleen Blanchette.  Feel Free to browse the entire website of all available Greater Asheville Real Estate MLS and Western North Carolina MLS, for all Asheville Real Estate Properties, Land Acreage, Horse farms, Investment Properties, Commercial Real Estate, New Home Plans, as well as handy relocation and moving calculators, tips for buying and selling a house, city and school reports, and more.  Just call us when you're ready to move ahead!