Throw Your Emotions Away

Setting the right and correct price at which to sell your home is not a simple formula, nor totally mathematical. I will tell you right off the bat that setting the price to sell your home cannot be based on your emotions.

There are many elements that factor into the decision of coming up with the right price for your home. For example, throughout this book, you will read examples of similar and similarly situated houses that sold for very different prices, along with the reasons for the disparities and inequalities.

Neither your memories of holidays past, family events nor a calculated home value, regardless of how much time you have spent analyzing it, cannot be what you believe your home value to be worth. One of the major downfalls and a critical factor that leaves many beautiful properties languishing and unsold is the overpricing by emotional sellers. This is based on emotional tides and the denial feeling buried deep inside the medial temporal lobe of sellers.

WATCH OUT FOR THE TEMPORAL LOBE

The temporal lobe is the region of the brain known as the limbic system, which includes the hippocampus, the amygdala, the cingulate gyrus, the thalamus, the hypothalamus, the epithalamus, the mammillary body and other organs, many of which are of particular relevance to the processing of memory.

This is the part of your brain that reminds you of the wonderful memories you have had in your home and the part of your brain that tells you that you cannot depart from your house unless you sell it for $1,500,00 million dollars.

The temporal lobe will justify a higher price every single time without fail. I as an agent come across dysfunctional temporal lobes doing what they do best every day of my life. Dysfunctional lobes will tell sellers that their house is worth a lot more when in fact their home is worth a lot, lot less.

Recognizing this very simple but important and critical truth will stop you in your tracks from overpricing your property.

Please let me price your property for you then I promise that we can come to a happy medium if necessary.

Familiarity with the real estate terms market value, appraisal value, and assessed value can save you from financial disappointment and frustration, and will allow you, together with your me, to meaningfully engage in setting your home’s listing price.

The most used classification of market value is “the most probable price a property should bring in a competitive, open market, under conditions requisite to a fair sale.”

Essentially, this is a pre-negotiation estimation of what a house should bring in its local market, its geographical area, generally an area such as a suburb or neighborhood.

The Appraisal value is an evaluation of a property’s worth at a given point in time that is performed by a professional appraiser.

Appraised value is a crucial factor in loan underwriting and determines how much money a person may borrow and under what terms. Here is the perfect example, the Loan to Value (LTV) ratio is based on the appraised value.

Where LTV is greater than 80%, the lender generally will require the borrower to buy mortgage insurance.

The Assessed value is the amount that the local or state government has designated for specific property and frequently differs from market value or appraisal value. Although the opinion of the assessed value may differ this is truly the harsh reality.

This assessed value is used as the basis of property tax and when a property tax is levied. The assessed value of real property is not necessarily equal to the property’s market value.

So here is another statistic, approximately 60% of U.S. properties are assessed higher than their current value.

SO, WHAT IS YOUR HOME REALLY WORTH?

The first step in selling your home is knowing the difference between value, worth, and price. Let’s examine the determining dynamics at work. Understanding those factors allows them to be leveraged. There are several ways a home’s value is derived.

YOUR PROFESSIONAL APPRAISAL

Nothing establishes the sale price of a piece of real estate but the price at which it sells. Houses are certainly not priced equally in the same manner that identical cans of tuna on the grocery store shelf or shares of stock are valued and traded every day on the stock exchange.

Real estate appraisal or property valuation is the process of evolving a perception of value for real property. This is the market value. Market Value is what an enthusiastic, intelligent buyer would pay for the property to an eager, realistic seller.

Real estate deals generally require evaluations because they happen irregularly, and every real property is exceptional in structures, features, appearances, and characteristics.

An appraisal aids in numerous resolutions and evaluations points in determining the price of the property. The seller can use the appraisal as a source for evaluating their property while the buyer can use it as an assessment on which to base an offer.

Lenders use appraisals to know how much money to credit to their borrowers. You get the idea.

Here are the important factors in a house appraisal:

• • • Dwelling type (e.g., one-story, two-story, split-level, factory-built)
    • Features, structures (including design) — materials used and the kind of structure present and how they were built
    • Improvements, enhancements made
    • Comparable sales
    • Location — type of neighborhood, zoning areas, proximity to other establishments
    • Age of property
    • Size – Depreciation

Condition, of course, is a crucial and very critical factor in the evaluation of your property.

Location is also a major factor; however, as property cannot change location, upgrades or improvements to a residential property often can and will enhance its value.

The professional appraiser should be a qualified, disinterested, and neutral specialist in real estate appraisals, with expertise in the region where the property is located.

The appraiser’s job is to determine and conclude an estimated value by inspecting the property, reviewing the initial purchase price, and weighing it against recent sales with the same purchase price.

COMPARATIVE MARKET ANALYSIS BY A REAL ESTATE PROFESSIONAL

This type of home valuation is free from real estate professionals and more helpful than automated online offerings. It provides detailed information on each house sold in your area over the last six months, along with the final sale price. It also includes the specifics of all the houses for sale in your area, including the asking price.

These homes are your competition. I, as the real estate professional, like to spend time with my clients and answer as many questions as possible.

If the questions are not asked by my clients, then I volunteer them. I always keep in mind that many times clients do not know what questions to ask.

The end result of asking the right questions is pricing the house in question realistically.

Along with giving the proper guidance and helping my clients understand how the worth of a home is determined, the current market must be considered.

By utilizing my professional real estate knowledge and experience, my clients can rely on proven expertise and know-how to allow me to market their home at the best listing price.

I will be happy to provide you with a (Comparative Market Analysis) (Please refer to the last page of this book if you would like more information on how to request a free home valuation.)

THE SECOND STEP (SELLING YOUR HOME FOR MORE)

Previous conversations showed that there is no predictable sureness in setting the value of a home.

There can be wide-ranging differences between the seller’s assessed price, the asking or listing price (market value), and the price at which the home sells (sale price).

Let’s turn to what I like to do with the homeowner/seller to elicit offers at, or even above, the listing price in a competitive market.

The seller’s time, effort, and investment are the most important parts of the process.

The seller’s willingness to prepare the home adequately and effectively for presentation and willingness to live in that pristine state for the time it takes to sell the property will greatly affect both the sale period as well as the price at which the home sells.

A market in which homes normally sell in no more than six months of listing is considered a balanced or neutral market which means a good number of homeowners are selling and buyers are purchasing; therefore, neither has an upper hand.

A variable market, for instance, like a major company entering or moving from the area will tip the scale toward homeowners to make a swift market or toward buyers to make a slow market.

The typical selling time in a swift market might be thirty days, while that of a slow market may be up to nine months. Typically, any number below six months is considered a seller’s market. 

LIVING IN A GLASSHOUSE

ONE Sotheby’s International Realty is the luxury real estate brand that I represent. Therefore, the properties that I list, and sell will be professionally videoed and photographed for online, periodical, brochure presentations, and company promotions.

All my listed properties, regardless of their market value, out of necessity, will be required to be kept in a constant “show-ready” condition.

Changes in day-to-day life are inherent in this intricate and sometimes, what it feels like is a very painful process, however one day it will become a very joyful occasion for both buyer and seller on the day of the closing.

As a “Global Real Estate Advisor and Professional Realtor” I get unexpected phone calls at all hours of the day and night from unrepresented prospects.

This doesn’t leave behind buyers’ agents requesting to show a property that I am currently listing. Let us not forget the frequent updates by phone, email, text and showing appointment schedules and messages that come in from listing agents. As a Realtor I am also dealing with repairs, reconditioning appointments, inspections, appraisals last minute details and of course, ah yes, the closing.

THE SHOWINGS AND ENDLESS TOURS

There are always repeated showings and tours when the home first hits the market. These showings are not always from potential buyers but instead from frustrated neighbors that were never invited into the wonderful parties that were held in that house before it got listed and from realtors that eventually want to sale the property to their clients.

My advice to my sellers is to always keep their home in pristine showing condition for impromptu and spontaneous visitors.

Keep in mind that in a real estate sale one never knows when our buyers might just show up. The perfect prospect might just drop in at dinnertime, or in the middle of the afternoon when you are picking up after your wonderful pet or during happy hour on a Monday when you least expected it.

CHILDREN (AND PETS) SHOULD BE UNSEEN, UNHEARD

As wonderful, lovable, and beautiful your children and pets are, they can be a distraction (nuisance is really the word) for potential buyers, affecting their experience of your home.

I advise my clients to plan for their children and their lovable pets to be crated or leashed. Better yet, to have them elsewhere at the time of the showing.

There is nothing less appealing than to bring a potential client for a showing and have the seller’s ten-foot-tall Great Dane jump all over them ready to leak their face profusely, then be followed by four high energy 100 pounds, 33 inches tall litter of Great Danes barking and jumping all over the client wanting to play. I will tell you now that this will not go very well.

Also, there must not be any toys lying about or dog hair on any of the furniture. The dishes should always be done, and the kitchen must be sparkling.

The bathrooms must not only be sparkling but must not have any wet towels or personal items in plain view. Everything that is a personal item must disappear, put away, flushed down the toilet or into the garbage.

The pressure of showing to everyone that may be even mildly interested in looking and not necessarily buying, may come from the idea that the more your home is seen, the more quickly and easily your home will sell.

Countless real estate agents stipulate their clients with dozens of homes to consider without a clear picture of what the buyer wants. Low-interest traffic can be heavyweight and an affliction on the seller’s time, energy, and resources. I know from experience that when showing properties, it can take an hour or even hours out of my day.

Finding an interested buyer is crucial for me and that is what matters most for my sellers. No matter which way we slice it, the home in questions will always be shown to numerous more uninterested buyers than interested buyers. That is a fact that we cannot get away from.

How many times do I have to show one of my many listed properties? In the ideal world that I would like to practice real estate in, I would be showing my listed properties only once and only to serious buyers. And although I have experienced this phenomenon, the chances are too far in between.

However, many “Sunday afternoon window shoppers” exist in the real estate business so I find myself showing my properties at any given time during the week and or weekends.

With that being said, one shouldn’t waste our time trying to appeal to uninterested buyers.

This is where planning, organizing, and my professional help as a qualified real estate agent will enable you to have your property sold even in the most intimidating situations without wasting efforts.