Pricing Your Home
Your home is only worth what a buyer in the current market is willing to pay. In other words, fair market value.
Simply put, the fair market value of a house is the highest price an informed buyer will pay, assuming there is no unusual pressure to complete the purchase. It is usually not the asking price.
You will know if your home is priced right by the number of showings.
If a property is overpriced, the buyer pool and agents notice the property when it hits the market, but there is not a perception of value. There are no showings and no offers.
If it is priced close to buyers’ perception of current value, there may be some showings, and maybe one offer below the asking price. Without competition and the sense of urgency, there is no need for a single buyer to offer the asking price, and a low offer is usually the result.
If the property is priced a little below buyers’ perception of value, it becomes a hot property. Buyers now perceive high value. The property receives significant showings and possibly multiple offers that could start a bidding war for the property. By setting the price a little below the buyers’ perceived value, the seller has simulated the conditions found in an appreciating market and ultimately, sells the property quicker and possibly for higher than the asking price.
You are hiring an agent to watch the market and determine how your property stands out against the competition. It is the broker’s job to make sure you have positioned your property at a price to drive significant traffic to it to create the best climate for more than one buyer to make an offer. That’s why they recommend asking prices based on real transactions—recent listings and selling prices of houses in your neighborhood.
If you want more help on accurately pricing your home, you can also:
Order an appraisal to price your home
Ask for feedback from people who walk through your home; this will help you see your house as a commodity that has positive and negative selling points
Ask a neighbor, friend or relative to point out advantages or disadvantages about your house that you hadn't thought abouts
Finally, most buyers leave room for negotiation when they make an offer. Thus, a certain degree of flexibility is usually called for on the part of both the buyer and seller. While it is ultimately your decision to accept or reject an offer, or present a counter-proposal, a good agent can be of great assistance to you during the negotiating process. As negotiations proceed -- whether in writing, face-to-face, or by phone -- your agent should inform you of your options in responding to each offer from the buyer. Even without such advice, a cool, rational manner in what is often a long, emotionally charged process will usually net you a significantly higher price.
To get an estimate of fair market value plus details on recently sold homes, ask a Coldwell Banker sales associate for a Competitive Market Analysis (CMA) of your house. This service is free of any charge, without obligation.