Have you heard these terms? Zestimate, broker price opinion, mortgage appraisal, tax assessment, market value. Everyone who compares and contrasts your home’s financial value uses information from the same pool of facts. And, then they temper the facts with opinions. The result is likely a price opinion within 5% of each estimation.
The method of comparison and contrast works well when we can pull from a pool of properties similar to the subject. When real estate inventory is down and stays down for consecutive years, we don’t have to throw up our hands and guess at a price. The information that matters most to home sellers is always available and easy to find.
We all sell for the same reason: to use our equity for a new life experience. Typical examples are buying a bigger or smaller house, relocating, divorce, and settling an estate. Everyone who contemplates selling has a good idea of the mortgages against the property and at least an inkling of the amount of money they want to have after paying off mortgages and selling expenses. When we know what we owe and have an idea of the money we want, we have most of what we need to set a price.
Know what you want to do with your home equity. People with a plan have a good idea of what they want to have in hand after the sale. For this example, let’s assume the number is $100,000. If we know the mortgage payoff is $200,000, we know $300,000 will not be enough because we have selling expenses on top of the mortgage. Add ten percent as a roundup number. We have to sell this house for about $330,000 to net the $100,000. Is our home worth $330,000? It might be worth more for some people and less for others. Fortunately, for the first quarter of 2022, there are too few homes for sale to satisfy the demand.
You’re only setting an asking price. It’s not our place to tell the market this is a fair price for a property. The market tells us. All we can do is use whatever facts are available to guide our thinking. Reasonable judgment is possible when we factor in the relevant facts, and there are always facts to consider.
Is my asking price $330,000 or $350,000? In this market, pricing to appeal to the broadest market will give us a chance to see buyers compete with buyers. When a person fears losing the house to another buyer, their motivation to improve their offer is the greatest. Without competition, the market is balanced, and that’s not the situation you want if getting the safest terms and netting the most equity is your goal.
Suggestion. Know the amount you owe. Know an amount you’d like to net after paying mortgages and selling expenses. You now have your lowest price. Consider the facts you can find. Are there any recent sales? How fast is the market? In what way is the market trending?
By tempering your expectations with facts, you will have an idea of a possible selling price and a probable selling price. A possible price is the one that will leave you with more equity for your next move. Probable is the number you intend to beat.
People who set their asking price closer to the probable price than the possible price are more likely to have the strength of the marketing working in their favor. The perception of value drives demand. Selling is a process of negotiating what each side wants. You know you want to walk away with more money instead of less, and the buyer wants to spend less. In a regular market, it’s more likely that a buyer will win the struggle. Eventually, we will see normal again. Today, set your price at probable and let the power of the market drive buyers to offer more money and security.