Don't Overlist the Property
If you are considering listing your property for sale, this article is for you. Serious sellers must list their property for sale at the right price and with good marketing techniques. Along with these two major items, the property must be in marketable condition to receive the best price.
This is advice the real estate agent will also give. Why would an appraiser give the same advice? The appraiser is trained to read the market reactions of buyers and sellers. We gather data and organize it in a manner that will provide us with the basis for value estimates. A couple years ago, (2003-2005), we were trying to determine if the listing was high enough to account for the increases that were occurring monthly. Listings were selling in less than 30 days. It took a trained professional to keep up with the increases that were occurring to obtain the best price for the seller. The real estate market can change as quickly as the stock market, can it?
We are in an equally difficult market that requires a trained professional to determine if the listing is low enough to attract a buyer in less than 180 days. The days on the market are 180 days or more in most price ranges in Charlotte County. If a sale must be obtained in less than 180 days, a conservative list price is important to reach this goal.
Over-listing a property will do more harm than good in a distressed market. Most of the data that I have reviewed suggests the over-listing of the property often results in a lower sale price, longer marketing time, and additional unnecessary questions in the mind of the buyers. Buyers do question how long a property has been on the market. If it has been on the market for an extended period, they will often question what is wrong with the house. Trying to convince them it was on the market so long due to the list price being unreasonable is difficult.
Properties that are properly listed will have a close list to sale ratio. In other words, it will sell within 5% of the listed price, 95% list to sale. However, in a difficult market the list to sale ratio may be as low as 90% or 10% less than the listed price.
Over-listing will eliminate potential buyers from even looking at the property. Most buyers have a price range and property type in mind. If the listing meets the property type but exceeds the price range, they will ignore that listing.
How can you avoid over-listing the property in a difficult market? Sellers today are using the assistance of real estate appraisers and agents. The seller often hires an appraiser when two or more agents have been interviewed with suggested list prices that are extreme. Other sellers prefer to hire an appraiser prior to interviewing a sales agent.
The sales agent provides a market analysis to the property owner that gives their suggested list price. The market analysis has less detail than theappraisal provided by a certified appraiser, but is a useful tool in the listing process.
Both professionals consider the supply and demand for a property similar to yours. The appraiser is trained to read data and extract value-contributing factors. Because the appraiser is required to be unbiased, the real estate agent often suggests the seller hire an appraiser to assist in the listing process.
The supply and demand is a very important factor to consider. The typical buyer will not pay more for a property than they could obtain a substitute for at a lower price. Considering the number of houses on the market at this time and the limited number of sales suggests a market that is out of balance. Buyers have many choices. Sellers must list the property at a reasonable price.
Accepting a listing at a price that is well above the market is a disservice to the seller, the property, and the agent. The seller that insists on a higher list price than is reasonable has a lesser chance of selling the house. This means the agent has little potential to recover time and money spent to advertise and show the house. The property often earns a reputation of being a problem property because it was on the market so long. This may not be the case but is perceived by the market in this light.
If you are considering listing your property for sale, review other properties on the market that are similar to your property. Search for recent sales of similar properties. Review the listings and sales yourself and see what you think would be a reasonable listing price. Decide how quickly you need to sell the property. Are you willing to pay concessions?
The real estate agent and the appraiser are there to provide a professional service. If you choose to obtain an appraisal, this will also provide you with a good guide for the buyer's financing. Even though you can sell a property for any price a buyer might be willing to pay, a bank will only lend on a percentage of the appraised value or sales price, which ever is less. It serves not purpose to accept an offer well above what it can be appraised for, take it off the market for a few weeks, only to find the buyer can't obtain a mortgage because it won't appraise for the contract price or more.
If you cannot part with your property for the suggested price, maybe it's not the time to list the property. It would be wiser to hold onto the property until your price is attainable in a reasonable amount of time.
Now is the time to buy! The market offers a wide variety of choices at affordable prices. The market won't always be at this point and it can change quickly. Be an informed seller and make reasonable listing decisions.
If you have a real estate appraisal question email me at adomatis@hotmail.com
