Competitively Pricing Your Home [FARM Version]
By Kelli Galippo • Dec 13th, 2010 •
Many sales factors are to be considered when setting the most competitive asking price for a home. A well-considered asking price for a home is a price carefully based on market conditions.
Be realistic about the sales price you are actually willing to accept for your home today so you are prepared when an offer is received. A common mistake homeowners make is setting expectations about the price they feel they should get for their home at what they believe will be its future value, or even what they might have gotten years prior, called dollar illusions.
Don’t forget that the present value of a home to a buyer is directly, though inversely, tied to interest rates. Sellers will only get a price for their home in direct correlation to the amount of financing available to buyers generally, and that is based on interest rates and mortgage payments equal to roughly 31% of the buyer’s monthly income.
When interest rates increase, as they will at some point in this recovery after jobs pick up, the amount of money lenders will lend a buyer decreases. Thus, the amount of loan funds available to the buyer to assist in the purchase of a home, plus the down payment limits their selection of a home to those priced by sellers to accommodate this shift.
Pricing your home is less about its value as perceived by the seller, and more about what the market conditions allow. If interest rates rise even half a percentage point, a buyer is then able to borrow less money than before — tens of thousands of dollars less for more expensive homes.
A proper asking price for your home is initially the most effective step for selling a home quickly, and voluntary transparency about the physical condition, possible hazards and security aspects of your home will hasten that sales process.
Copyright © 2010 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.