When it comes to pricing your home to sell in Greater Oakland County, you’ll find lots of “experts.” The neighbors may want you to set a high price, thinking it will make their homes more valuable. Your company may encourage you to set a lower price so the home will sell quickly and you can move to your new assignment. You might be thinking in terms of what you paid for your home, how much you’ve spent on it, or how much profit you want from it.
But who sets the price? When you put your house on the market in Greater Oakland County, you set the asking price. But it is the market that determines the selling price. If the asking price is set correctly, the house is likely to sell fairly quickly. If set too high, the house may languish on the market, unseen by the right buyers.
Pricing It Right
A correct asking price is crucial to a timely sale. That’s where we come in. But how do we know how to advise you on price?
- First, we look at the prices brought by similar homes recently sold in the area, and compare their features to those in your home.
- Then we survey the competition, seeing what homes are currently on the market, how they compare to yours and how long they have been up for sale.
- Next we look at how the number of buyers compares to the supply of homes for sale.
- We take stock of the direction of the market. Are prices rising or falling? Are homes selling quickly for the asking price?
- Finally, we look at the incentives other sellers are offering, such as paying some closing costs, and what conveys with the property, like draperies or washer and dryer.
As you noticed, neither how much you paid for your home nor how much money you wish to profit from the sale affect the market value of your home.
Avoid “Testing The Market”
Many times, sellers are tempted to price their homes a little high in hopes of getting more money from the sale. But often the opposite happens, and they sell – after a long time on the market – at a price below what the home would have sold for if it had been priced correctly at first. This is because most buyers look only at homes they can afford.
- If a home is overpriced, many potential buyers don’t bother to consider it because the asking price is above what they can afford to pay.
- Buyers who do tour the overpriced home see that it doesn’t measure up to others in the same price range.
- By pricing the home close to market value, on the other hand, the sellers make the most of their best opportunity to sell to the home’s true market during the highest traffic period – the first weeks after the new listing comes out. That’s when real estate agents call in the buyers they have been working with to see what’s new on the market.
“The best game plan is to price your home over market to give yourself room for negotiation if offers come in low.”
REALITY: Most homes sell within 5% of what similar neighborhood homes have recently brought. Pricing your home too high will actually scare buyers away. They’ll assume you are unrealistic and likely to be difficult to deal with. In addition, buyers who believe your home is out of their price range won’t even look at it.
The best way to deal with a low offer is by making a counteroffer or rejecting the contract outright. Having an experienced real estate agent in your corner will help you price your home to sell quickly, while netting you the best possible return.
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Home Team-When it’s time to buy a home, you’ll find it takes a team of professionals working together on your behalf. With so many people involved in such a large purchase, it pays to know who is responsible for each facet of the home-
The first professionals, of course, are real estate professionals—like us—who help you begin and close the home-search process. Our local expertise and market knowledge help you make an informed decision when you are searching for the perfect home.
Remember, a seller’s listing agent is committed to the seller’s interests only, working to get the highest possible price for the property. A buyer’s agent is legally committed to the buyer’s best interests and helps buyers search for homes, advises them during negotiations, works to get the lowest price and best contract on the homes their clients want and keeps the process on track to closing/settlement.
Next, is a mortgage lender who helps determine how much home you can buy. Working with the right lender (ask us for names) early in the home-buying process ensures you look only at homes you can afford. And, when you get pre-approved for a mortgage, your purchase offer will carry more weight with home sellers. Your lender will also help you find a loan that fits your financial situation.
But it takes more than just two professionals to make your home purchase run smoothly. The cast of service providers who will help you through the process is lengthy. Here’s a peek at the people you’ll meet on your journey from shopping to settlement.
Scoring Your Credit
Credit-reporting agencies such as Equifax, Experian and TransUnion research your credit and collect these facts in a credit report that’s been ordered by your lender. Their records include documentation from databases that store credit information, payment history, public records (such as judgments and bankruptcies), employers, banks and previous landlords.
It’s prudent to have a home inspected for problems that may not be evident at first glance—or even known by the seller. A professional home inspector will report on a home’s condition, helping you determine if it’s the home for you. To protect both the lender and buyer, other inspectors may be called in to search for specific issues caused by pests, mold, radon and other possible concerns.
If the home inspector finds major damage or significant problems, you or the seller (depending on your contract) may need to have someone come in and make repairs.
The homebuyer purchases a title insurance policy from the title company to protect the lender’s interests, and another policy to protect the homeowner, in case hidden tax liens or other title problems arise later. This policy also insures that the title to your home is free and clear and that you will actually own the property.
The appraiser, who works for the lender, determines the property’s true market value. If the appraisal comes in lower than the agreed-upon sales price, the buyer can make up the difference with a higher down payment, the seller can drop the sales price or the contract may be declared void, depending on how it is written.
Private mortgage insurance (PMI) companies insure mortgages that exceed 80% of the value of a property. This policy protects the lender in case the buyer defaults on the loan. A separate policy from a homeowners/hazard insurance company protects the homeowner and lender against home damage from fire, storms and other natural disasters, and would pay off the debt to the lender if a catastrophe occurred.
The closing agent could be an attorney, or an escrow or title-company agent, acting as an impartial third party to the transaction and ensuring the process is completed properly and lawfully. You are free to call an attorney in to the transaction, but some areas of the country require the presence of legal counsel.
Whether you’re buying your first house or your umpteenth, contact us first. I can answer your questions about the entire home-purchase process…and help you pull together the best home team for you.
Negotiating The Best Contract For Your Home Purchase is very important when it comes to writing a Purchase contract on a new home. Keep in mind the Home Sellers want (in most cases) to do whatever possible to make the you, the Home Buyer happy and keep the deal together. The way you and tour Realtor structure the purchase agreement can not only save you money, but can get you almost everything you want in your home purchase. Here are some fine points of contract terms that you and your real estate agent may want to include in your purchase offer or in counteroffers once negotiations with a home seller are underway. Feel free to discuss and share them with your Realtor, and as always I’m here to help with any and all of your Home Selling or Home Buying needs.
Finding a monthly payment you can afford is key to getting approval for a mortgage. Sellers may be able to help by agreeing to the following terms:
- Buy-down. Ask the seller to buy down the initial interest rate of the loan. A lower interest rate means lower payments, which means you’ll need less income to qualify for the loan.
- Take-back. Perhaps the seller would agree to a mortgage take-backâ€”financing a second mortgage that could help you qualify for the first-mortgage loan. This may be cost-effective if you are unable to come up with a full 20% down payment or you would otherwise have to pay a higher interest rate for a jumbo or sub-prime loan. (Ask us how a take-back would affect your financing.)
These are options designed to help reduce buyers’ out-of-pocket costs such as down payment and closing costs.
- Points. A seller who pays some or all of your loan discount points sweetens the purchase by reducing the amount of cash you need at closing/settlement and providing a tax write-off, as many buyers now can deduct the discount points sellers pay at closing as a Schedule A mortgage expense.
- Closing costs. Ask the seller to pay some or all of your closing costsâ€”title search, attorney’s services, appraisal, recording, etc. (Be aware: There are limits to how much a seller can contribute to a buyer’s closing costs.)
- Furnishings. The seller may be willing to convey some household furnishings you would have to purchase later, such as a swing set or sandbox, tractor-mower, draperies tailored to specific windows, etc. This may be treated as a separate addendum in the contract.
- Home warranty. For as little as $300, the seller can provide you with a one-year warranty that covers all the home’s major systems. Some programs even cover appliances.
Contingencies refer to specific things that must happen before the contract can go to settlement.
- Inspections. To protect yourself against unexpected and expensive surprises, make the contract contingent on a satisfactory professional home inspection and pest inspection. The type and characteristics of the property may also prompt you to order a professional check for mold and radon gas.
- Financing. A financing contingency states the amount, type and maximum percentage rate of the mortgage loan you seek, along with a time frame for obtaining financing. Should financing not come through as expected, the contingency would allow you to opt out of the contract.
- Sale of home. If you need to sell a home before purchasing your next one, include a clause in your contract making it contingent on you being able to sell your home within a certain period of time.
Accommodations are small favors you can ask to help smooth your transition.
- Occupancy. Ask for a move-in date that will allow you to move directly from your old home into your new one, avoiding costs for temporary housing and storage.
- Storage. If you can’t avoid a gap between moving from your old home to your new one, ask the seller to allow you to store some items at the new home (perhaps in the garage) until you can move in.
- Services. If the seller has paid in advance for services such as lawn care, pest prevention, etc., and time remains on those contracts, ask the seller to transfer the remainder of the contracts to you.