More often than not, the sale of real estate is held up by the seller’s expectations and high asking price. It’s easy to get stuck on a number that is too high for the current market conditions, especially in 2017, when home values have sky-rocketed to pre-2007 numbers. After all, sellers usually remember how much money they have put into the home for renovations and repairs along with the price they paid to purchase the home.
Not only do sellers look at what they paid for their house, but they also take into consideration how much of a profit they want to make, how much similar properties have sold for over the last ten years, and how much they are going to pay in real estate commissions and fees Sellers also need to look at how much they still owe on the home.
If you think about it, the pricing strategy used to calculate an asking price for a home is similar to the one some people use to price the items they intend to sell at a yard sale. The prices are typically higher than what the sellers are willing to take simply because they know that the buyers are going to try to knock them down on the asking price.
Unfortunately for sellers, determining the asking price should take into consideration how much a buyer is going to be willing to pay for the home. When the housing market is flooded with properties of varying sizes and styles, the size of the price tag bottoms out for many sellers. It simply isn’t possible to demand a high price for a home when so many other properties are available for purchase.
Sellers who have the flexibility to consider a range of prices are in a better position to sell their homes quickly, avoiding the dreaded state of having a home languish on the market month after month after month. A home that is priced reasonably, within the existing range of selling prices for similar homes, is more likely to sell quickly.
Today’s prospective home buyers are savvy enough to take advantage of the Internet in order to compare asking and selling prices for nearby properties. In fact, if the buyers can obtain information about how much the sellers still owe on their mortgage balances, they are in a better position to estimate exactly how low the sellers are willing to go with their price. With the current situation of Trump freezing the FHA rate drop, its become even more important to ensure your pricing correctly from the get go, as most home buyers are locked into a rate for 60-90 days and don't want that rate to go up.
On top of rate issues, there has been an influx of issues with folks trying to purchase another home after the 2008 collapse, according to CreditGuide.io, "Credit repair is at an all time high for prospective home buyers as we're seeing companies such as Lexington Law, Sky Blue Credit and CreditRepair.com get inundated with requests for help with raising a borrowers credit score in order to qualify for the best rates on the market."
Add to that scenario the fact that friends and family members often weigh in with advice about how to negotiate a lower price amid murmurings of “Did you see the stains on the rugs and the holes in the window screens? This house really isn’t worth what they are asking.” The suggestions people make to prospective buyers often influences their decision to make a bid.
Another factor that constantly affects the asking price is the length of time that the property has been sitting on the market. Homes that were worth much more in 2016, are still sitting on the market with over inflated price tags next to properties that are more reasonably priced within today’s pricing trends. Nonetheless, it takes two to tango as the saying goes. If the buyers and sellers don’t step onto the same stage, the property is less likely to sell in a timely fashion and being on the market longer than 2 months isn't an option anymore, especially with the latest figures showing average length of home sales taking a mere 52 Days!
After all, in a down market, buyers have their pick of a large selection of homes for sale. If they don’t like the asking price on a specific home, they can simply keep looking until they find a home with a price tag they can afford within the period of time they have. Choose your listing prices carefully and do your diligence, as home buyers are becoming more aware of the market shifts - along with FHA premium hikes, this could mean your pricing will need to be more aggressive than you may think.