For the "For Sale By Owner" proper Home Pricing is critical.
- Set it to high - Buyers stay away!
- Set it too low - You lose money!
Nationally “For Sale by Owner’s” under value their property by 15%
"The “For Sale by Owner” home seller can SAVE thousands on agent fees and LOSE tens of thousands due to
Most people that choose to sell their own home think only about the marketing process, and give little or no attention to establishing their OPTIMUM SELLING POINT. As a consequence, more often than not, “For Sale by Owner’s” will under value their real estate. When you use a real estate agent, you’re paying a commission for their expertise in marketing and pricing. Both are critical to a satisfactory transaction.
As a "FSBO", how do YOU avoid under pricing your Real Estate?
In order to establish your OPTIMUM SELLING POINT as a “For Sale by Owner” you will have some tasks to perform.
The Real Estate Appraisal
The first is the easiest, but it will cost some money - usually less than $300 - but well worth the peace of mind gained by knowing that you have your real estate properly priced.
“For Sale by Owners” should have an appraisal done by a local reputable real estate appraiser.
- You get get an accurate and fair market asking price for your home.
But you also get a detailed analysis of your real estate versus other recent sales in your neighborhood.
- You will also receive a: Time Line of Sale.
This is an indication of how long the homes comparable to yours were on the market. This gives you an idea of how long you should expect it to take for your property to sell.
This can be very useful information. As an example, let’s suppose that you need to sell your home in 90 days or less. Homes comparable to yours in the appraisal all sold in around 180 days.
Knowing this, you will now be able to re-evaluate your expectations. Do you lower your asking price in order to sell quickly, or do you make plans for the possibility that it will take longer than 90 days to get
the full value of your property?
- With an appraisal you will be able to compare other aspects of your home.
Like: age, location ( i.e. corner lot, cul-de-sac, etc.), rooms, baths, square footage and so forth.
As an example of how to use this information, lets suppose that your home has a one car garage. One of the comparable real estate sales on the appraisal has a two car garage. The real estate appraisal will make an adjustment for this. Now you will be able to get an idea of the value for adding an extra garage.
- Next your real estate appraisal can offer insight into how financing can affect the value of your property.
For example suppose that the appraisal indicates that all homes comparable to yours had new conventional loans, and you plan to sell with “owner carry financing“. This will add value (and sometimes a quicker sell) to the property. Why? Because more prospective buyers will be qualified to purchase.
In conclusion, an appraisal delivers a lot. Here is a quick review:
1) Establishes a “fair market value” for your home.
2) Gives you an idea of how long to expect it to take to sell.
3) Compares features of your home to others in your area sold recently.
4) Allows you to consider financing options.
Yet another source to assist you in pricing your home is your local
The best time to research the information at your local assessor's office is while you are waiting for the appraiser to get back to you with his appraisal.
Putting it all together
If you have done your reseach at the assessor's office, when the appraiser you hired gets back to you with his professional assessment you will already have a rough opinion of your own with which to compare it.
You are not expected to "get it right". After all he is the “pro”. However, any large discrepancies greater than ten percent, higher or lower, would indicate a reason for a question and explanation or two for your appraiser.
Remember that his valuation is “objective”
while yours is “subjective”.
Two other points:
1) First, he is the professional and it’s his opinion and research that you are paying for. If he is reputable and experienced, he is probably right!
2) Second, it’s your home, you can ask whatever price you want for it!
Do you reduce your asking price since you are not paying real estate
The answer is NO! NO! NEVER! You are doing the real estate agent's job, shouldn't YOU be entitled to those fees?
Now, one very important legal aspect I need to point out here:
You can quote one and only one price to all inquires!!
This safeguards you from laws that where enacted to shield certain protected classes. While the laws themselves are good, you could inadvertently open yourself to legal actions by favoring any one person or class over another. You should deal and act respectfully and equally with everyone interested in your home.
You can however, negotiate a lower price.
Just make sure that the buyer is the one making the proposed lower price.
Specific details on how to handle this phase of your home sale can be found in NEGOTIATIONS.
Keep the price the same for everybody.
It makes your life as a FSBO much easier.