How Sellers Price Their Home For Sale

The best way to understand market value is through comparative research.  Professional real estate consultants review and study at least 40 to 60 listings, visit 10 to 20, and inspect 5 to10 properties to develop a sense of relative worth for properties in a given area.

Additionally, a professional appraisal factors into determining the fair market value of the home.  An appraisal protects you because Lenders want to make sure that you don’t overpay for a home.  If the home value does not meet the sale price in the eyes of the appraiser, they’ll let you know.  At that time, the Realtor can renegotiate the sale price or void the agreement and refund your earnest money deposit if they have written this opt-out clause into the contract.

There are four basic factors that influence how sellers price their homes.

1.  Sellers Get Poor Advice

Some real estate agents inflate the value of the seller’s home in an effort to obtain the listing.  There’s a natural tendency on the part of sellers to list with the real estate agent who gives them the promise of the highest selling price.

When homes are overpriced, they 

  • Stay on the market longer
  • May not sell

2.    Sellers Set an Unrealistic Price for Emotional Reasons

These sellers believe their home is worth every penny of their asking price for personal reasons.  Sometimes they lose their objectivity and focus on features that seem more valuable to them (rather than to the buyer).  For example, the hot-pink paint in the master bedroom may not appeal to potential buyers.

 Additionally, some sellers, anticipating reticence to buy, feel it’s a good idea to leave a little “negotiating” room in the asking price.

3.  Sellers Pricing Their Home at Fair Market Value

These sellers carefully and realistically study other homes for sale, and may consult with a real estate professional.  They price their home competitively, and it usually sells quickly at (or very near) the asking price.

4.  Motivated Sellers

When sellers want afquick sale, they price their home  below fair market value.  These homes usually sell right away, at or above the listed price.  There are usually competing offers.

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