When it comes time to sell your home home sellers should have the
expectation their home should sell for fair market value. It is almost
impossible to sell your home for more than fair market value. And even if
you do find a buyer willing to overpay for your home, most likely a bank
appraisal will be ordered. In many cases a buyer will not, or cannot
purchase a property for more than the appraised value.
As a home seller, your success
lies in getting your
home priced right, which is in the range of fair market
value. When your home is priced at fair market value it receives a large
amount of interest from qualified buyers. Hopefully selling your home in
a reasonable amount of time at asking or very close to asking.
As the price of your home pulls
away from market value and is priced higher and higher far less interest is
garnered by qualified home buyers.
When the price starts to extend
past fair market value and the home is
overpriced it will linger on the market exceeding the average days on
market for similar homes. You will also notice your home will get very few or no
showings.
Once a home has stagnated on the
market you will probably have to have one or more price changes to
get the home at or slightly below fair market value to regain interest of the
pool of qualified buyers.
Listing your home at fair market
value from the start has many advantages. It can even be the difference
between your home selling or not selling.
True Seller Story of A Seller
Misunderstanding Fair Market Value
Last year I had a home seller who
wanted to retain my services, Unfortunately they severely overpriced
their home well past fair market value.
They listed their home at 350k
when I told them and showed them that fair market value was $290-315k with a
marketing price of $320k because of a rapidly appreciating market.
The first weekend of open houses
approached. The sellers were excited thinking they would be flooded with
offers, Which I warned them that I think attendance would be low and I
wasn’t expecting offers due to the overly high asking price. Well 6
couples cam over two days of open houses, with weeks of no showings. Then
a small price change and more of the same.
They finally came to me and asked
me where they needed to price the house. I suggested a significant price
change to 320k. We immediately received offers at 290k and negotiated,
both offers and the negotiations stalled at 305k. Third offer comes in
and starts and $290k and we negotiate to $305k and negotiating stalls.
At this point it has become clear
to my sellers. They commented how they noticed each buyer started at
$290k and ended at $305k. They followed up by saying that this seems to
be what buyers are willing to pay for their house….. again fair market value is what a group of qualified
buyers will be willing to pay on the open market!!
No matter what you think your
house is worth you need a buyer to step up and pay your price. Without a
buyer your home remains unsold.
Unfortunately if they had priced
it right from the beginning they would have sold for 5-10k more. But they
let the home linger to long on the market. It also cost them on buying a
new home as interest rates and prices rose through the 7 month process.
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