Posted by: rgmorgan | July 25, 2009

A Price War and a Beauty Contest

This is a phrase I have heard twice recently in discussions to describe today’s real estate market. What does it mean? if you look at the “supply and demand” approach to real estate it helps describe what each seller is facing as they decide to sell their home. To price your home properly to sell you need to take several factors into consideration including the competition. Working with your Realtor you can determine what other properties are for sale in your area. This information allows you to see what your home will be competing with in trying to attract a qualified buyer.

Why is it important to understand the competition? Put your buyer’s hat on and think about how you buy. Do you look at just price? Do features and benefits matter? Most people want the best product they can find for the lowest price. Homebuyers are no different. If you want to sell your house in todays market you will need to determine the price range where your home will be the “shining star”. That is based on the number of homes for sale in an area in a price range and then factoring in the number of homes in that price range that are selling each month you can determine what range affords you the best chance to sell your house in the next 30 days. If this sounds confusing work with a knowledgeable Realtor and ask them if they can show you a supply and demand comparison.

In today’s market your home needs to be in the top 30% as far as condition and the bottom 30% as far as asking price. Hence the beauty contest and price war.

What should you do then? One thing is to make sure you take a hard look at the condition of your home. Look at it from the street to check it’s curb appeal. Does it need paint? How is the lawn, the roof, the landscaping etc.? Perform the deferred maintenance tasks to bring your home to the presentable stage.

If your home is in dire need of updating you need to decide if you want to be the investor or sell to an investor, if you want to be the investor you need to spend the money to update items such as the kitchen, flooring baths etc. If you want to sell to an investor then you need to understand that you will be selling at a discount because this investor must spend those additional dollars to do the updating to allow them to either live in an updated home or sell the home to another buyer. Both strategies make sense, work with your Realtor to decide which way makes the most sense for you.

Today we hear about the real estate market being a “buyers’ market” and while that may be true if you price your home correctly where it can win the beauty contest I believe there is a sellers market within the larger buyers market. Many times homes that come through as the shining star receive multiple offers. Buyers are out there and they are typically searching within a specific price range. Price your home too high and you might never get seen by the right buyers. Price it correctly and win the beauty contest and the offers will come.

Work with a Realtor familiar with “Supply and Demand” pricing and together create a winning strategy. Good luck and make it a great day.

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