| Buying

We’re almost four months into 2013 and I can’t count the number of stories I’ve heard about Realtors under-pricing properties in search of multiple offers and potential bidding wars. It’s a tried and true technique and it works but sellers need to be careful not to turn buyers away with an unrealistic list price.

Low prices with hold back offer dates can create ‘auction fever’ resulting in being out-bid and leaving many buyers discouraged. After all they’re being brought to properties that MAY be listed in their price range but the properties actual market value may be considerably out of that buyers reach.

So what is market value and how is it decided?

Well, when you are getting ready to sell your home, the first step is to contact a real estate professional to get a comparative market analysis done (CMA) to determine the market value of your home in today’s market. Market value is simply what buyers today are willing to pay for a particular product. A comparative market analysis should include:

Active Listings – Homes that are currently for sale. These homes are your competition but do not indicate market value as they have not sold.

Sold Listings – Homes that have closed within the last 6 months. These are your ‘comparable sales’ and these reflect market value.

Expired Listings – Homes that did not sell during the listing agreement period. These reflect the highest median sales price because they did not sell and were probably unreasonably priced.

Your real estate professional should then help you to compare your property to these. Looking for similar square footage, similar upgrades, condition etc and together you and your real estate professional should decide fair market value for your home and what price your property will enter the marketplace with.

The final decision is always the Sellers but as their Agent I certainly wouldn’t recommend under pricing their home by over $100,000 as in these stories I’ve heard recently. You’re leaving a lot of disappointed and discouraged buyers in the dust with this!!

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