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When Is It Time To Lower The Price Of My Home?

Your home has been on the market for 30+days and your realtor is recommending that you reduce the price. He/she supports this reduction with new comparables (recent sales) in your area, or has the extensive knowledge of what is happening in your local market place.

Many of you in the past have heard that the value of real estate is determined by location, location, location! This statement is generally correct. Location is the most important factor in determining property values. A 3000 sq. ft. home in Sarasota will sell at a much lower price point than in Beverly Hills, California. However, there are two other factors that play an important role in determining values; condition and price.

Pricing is both a science and an opinion at the same time. Appraisers will use many variables for appraisals to include comparables. Real estate agents mostly use this method. This can be a difficult task if there are little or no recent sales to support values, or there are no properties similar to compare. Realtors will sometimes list a home at a high price because the seller thinks their home is worth it, yet the comparables or market do not support it. This can work against the seller. Remember if the buyer is financing, and/or the buyer is paying cash and orders an appraisal, the property must come in at the purchase price. If it does not appraise at the sale price, the home price is then renegotiated putting the burden on the seller to reduce the price to the "appraised value." The first 30-45 days your home is on the market is when you receive the greatest impact and exposure in selling. Many potential buyers are set up on an internet campaign to view your property immediately when it becomes available.

A price reduction (also referred to as " price improvement"), can sometimes be a difficult conversation to have with a homeowner. Even when a realtor may have discussed price reductions in the first listing consultation. Some agents may write the price reduction increments and time- frames into the listing agreements. Before I have this discussion with my sellers, I review all past and on-going marketing that I have done, and provide up-to-date activity on their home along with feedback from other agents that have toured the property.

Sellers cannot control the location of their existing property, unless you can lift your home up and move it, however you can control condition and pricing. When we talk about condition, the question you have to ask yourself, "If I were a buyer, would I buy my home at this price and condition?" The second question to ask yourself, "Is my home in the best condition to attract potential buyers and to maximize my price point"? An experienced realtor can assist you in providing objective advice as to what you should do to your home to improve marketability and get the most value for your home. This should happen prior to listing your home on the market.

Sometimes price reductions will not have as big of an impact as investing money into your home to make it more attractive and current. I believe it is more advantageous to improve It is recommended to make improvements I recently saw a home in our area that was listed for 6 months with another real estate firm. During the six- month listing the home underwent three price reductions, totaling $30,000. The listing eventually expired and another agent from our office relisted it. Before the agent in my office would list the home, she advised the sellers to repaint the interior in a neutral tone. The sellers took the advice and then listed the home for $5000 more than the expired price. Within a week, they had an offer at 99% of asking price!

First impression in buying is EVERYTHING! According to the National Association of Realtors, most "buyers' start their home search online (Zillow, Realtor.com, Redfin, etc.) This is a beauty contest and you want your home to get first place, not second! I understand a "seller" may not want to invest money into their home, as they feel they may not get it all back in the sale. This can happen in some instances, but most of the time you will reap the rewards on the improvements or repairs and will be able to move onto your next home all the quicker. It is best to do repairs and/ or improvements prior to putting your home on the market. Not all homes need improvements or repairs but if you see something that needs it, a buyer is going to see it as well. This will vary based on the age and upkeep of the property. I specialize in listing homes, while my wife, Michelle exclusively works with buyers. I will bring her to my listings to get her opinion from a "buyer's perspective", as well as have her attend the photography session to assist in making sure we showcase the homes we list in the best possible manner for marketing. She has a better eye for details than I! It is always best to trust and listen to your real estate professional's advice. If your realtor asks you to reduce the price of your home and you do not feel they have done enough marketing, and or you feel they are not fulfilling their agreement, you should communicate that to them. The goal, for both the seller and the realtor, is to get your home SOLD!

If you, or someone you know is looking to sell, buy, or invest into real estate in the near future, please contact us at Hearon Realty Group. We appreciate the opportunity to assist you with all your real estate needs!

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