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Sellers: Pricing is KEY to Selling in this Market

Pricing is Key

We know it’s a Seller’s Market still in Central Indiana but still, pricing is key. What lots of sellers don’t realize is that doesn’t mean you can name your price. Federal and State regulations (through the appraisal process) ensure that the home still sells for a fair market price.

So, how can a seller get the most for their home and it still be supported through the buyer’s appraisal?

Sweet Spot Pricing

There is a sweet spot for pricing your home for sale and if you commit to it, you are more likely to sell quickly and possibly with multiple offers!

Key is PricingIn 2019, 1 in 10 homes received multiple offers. The prediction for 2020 is that 1 in 4 homes will receive multiple offers. Why? Inventory is sooooo low!

When a home in good condition and priced right hits the open market, the swarms of buyers out there are JUMPING to view and then write offers.

You are actually doing yourself a disservice when you price your home high or at the high end.

Buyers are savvy; Buyer’s Agents are savvy. Together, they look through the homes available on the market and won’t even visit homes they feel are overpriced. They skip them and move on. Buyers will wait for that needle in the haystack – that should be YOU!

Pricing a Home is Different

Sellers get stuck in the normal “retail” pricing mentality when they go to price their home. They think they need to price it high to leave room for negotiating. This couldn’t be farther from the truth.

For instance, when you price items at a garage sale, flea market or car lot, it’s typically done to allow for negotiations. Price it a little higher and you might end up where you want to be in the first place.

Not so with homes.

When a homes’ condition and price are in the “sweet spot”, the seller is more likely to get multiple offers. This makes the interested buyers compete for the home by offering the most attractive terms and price they can!

This is a seller’s dream!

What’s the Sweet Spot?

The sweet spot for pricing a home is the price that will attract the largest number of ready, willing and able buyers in that price range. You get more showings and, when done right, multiple offers!

The caveat to pricing right is that your home’s condition should be reflected in the price. An appraiser gives a home a condition rating as part of the process of determining fair market value.

The condition rating is anywhere from C1 (brand new structure and components) to C6 (substantial damage or safety, integrity of structure is bad.)

Most existing homes fall in the C2 to C4 range. A home needs to score at least C4 to qualify for a mortgage loan, in most cases.

Caveat: We are not appraisers and their sole opinion of condition is the one reflected in the appraisal report. However, the Uniform Appraisal Dataset guidelines for C2 to C4 condition ratings are:

C2:  The improvements feature no deferred maintenance, little or no physical depreciation, and require no repairs. Virtually all building components are new or have been recently repaired, refinished, or rehabilitated. All outdated components and finishes have been updated and/or replaced with components that meet current standards. Dwellings in this category either are almost new or have been recently completely renovated and are similar in condition to new construction.

C3: The improvements are well maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building components, may be updated or recently rehabilitated. The structure has been well maintained.

C4: The improvements feature some minor deferred maintenance and physical deterioration due to normal wear and tear. The swelling has been adequately maintained and requires only minimal repairs to building components/mechanical systems  and cosmetic repairs. All major building components have been adequately maintained and are functionally adequately.

Basically, condition can affect fair market value when compared to other homes for sale and compared to the guidelines used by an appraiser. Be sure your home is in good condition functionally as well as aesthetically. And, price it accordingly!

Pricing is key to selling your home quick and for the best price. Your agent is your guide to finding the sweet spot in pricing for your local market! They can pull the same comparable sold homes as an appraiser would. This will help you come up with the asking price that will have buyers swarming to get a look at your home!

Bottom Line

The bottom line is this: If a home in this local seller’s market has not sold in a month, you can probably look to 3 possible reasons:

  1. The listing price is too high for the type of home in the local market.
  2. The condition of the home does not match the listing price.
  3. The home is considered a “specialty property.” It’s a luxury home or in a price range that not all buyers can afford.

Work with your agent to find the price that will make buyers sit up and take notice. Receiving multiple offers should be your goal!

Give us a call today to talk about pricing your home right for the local market!