How Not To Set Your Sales Price

Not To Set Your Sales PriceThe single most important factor in selling your property is the price. At the right price, almost anything will sell, but what is the right price?

Here are three ways NOT to set the price:

1) Predetermined Return on Investment (ROI).
For example, you decide that you must get a 20% ROI -the house you bought for $400,000 must go for $480,000 plus commission and other expenses. Real Estate prices may be dropping. What is the current economic situation and how are houses selling in your neighborhood? If all the house prices are dropping, expect that your house price will drop as well. Buyers don’t care about your investment (initial investment, equity and return strategies). Real estate sales are not made based upon a Seller’s ROI.

2) Return on Improvements.
For example, you put on a new roof ($10,000) and installed 10 new windows ($10,000) so you want $20,000 above what other properties have been selling for in your neighborhood. Buyers don’t care what you paid for maintenance and improvements, only that they don’t have to do it. All that matters to the buyer is that the property is in good shape. Real estate sales are not made based upon a Seller’s Return on Improvements.

3) Return plus coverage of your outstanding mortgage and/or the Real Estate fees.
For example, you owe $100,000 on the condo and the real estate fees are going to be $20,000. You want your condo to sell $120,000 above what you paid. No buyer cares what your mortgage is or how much you are paying in real estate commission. Many are paying off mortgages and everyone is paying commissions. Real estate sales are not made on the basis of what a Seller owes.

In a “buyer’s market”, the best way to determine the market value is to establish your price and then keep lowering it until the market responds. If you are not willing to do this then maybe you shouldn’t list yet. Either be prepared to lower your price to meet the market or wait for the market to come up to you.

Your agent, along with other responsibilities, is required to obey your instructions and will list the home at the price you instruct; however, you may never sell if the price is not what the market will pay. Listen to the advice of your Realtor. Look at comparisons, what is on the market now and what has sold and at what price. This is an indication of the state of the market.

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