USA – Florida
Real Estate News – S.E. Florida
Orange County – Palm Beach County – Broward County
Orlando – Vero Beach – Fort Pierce – Port St. Lucie – Stuart – Jupiter – Palm Beach Gardens – West Palm Beach – Boynton Beach – Delray Beach – Boca Raton – Fort Lauderdale – Hollywood – Deerfield Beach – Lighthouse Point – Wellington
&
Kissimmee – Cocoa Beach – Melbourne – Palm Bay – Sebastian – Hutchinson Island – Jensen Beach – Palm City – Port Salerno – Hobe Sound – Tequesta – Riviera Beach – Lake Worth – Ocean Ridge – Manalapan – Pompano Beach – Lauderdale By The Sea – Oakland Park – Dania Beach – Hallandale Beach – Loxahatchee – Royal Palm Beach – Okeechobee – Indiantown
Properly Pricing A Property For Sale
As I discuss properly pricing a property, please understand, this article is about exactly that. Properly pricing – neither underpricing it and giving it away, nor overpricing it trying to get way more money than the property is worth. In both cases, improper pricing will backfire on the property owner and yield them less money than if the property was properly priced from the onset.
When a property is listed, it will be the “hottest” during the first 30 days on the market. The property will likely get the most showings during this time period while brand-new to the marketplace. If the property is priced correctly, the property will yield the most money for the property owner. This is why….
It is not uncommon when either an inexperienced or unscrupulous real estate agent will list a property way above the fair market value. This is either from lack of experience, or to beat out other agents more realistic pricing, whereby later the listing agent invariably hits the owner for multiple price reductions later.
Due to the proverbial “greed factor” many property owners jump at overpricing their property. It is common for a homeowner to think they have the best house on the block, the best location, the best floorplan, the best upgrades, the best pool, the best of everything, therefore overinflating its worth and listing it well above fair market value. To assure the real estate agent in getting the listing, the agent typically agrees with the homeowner 100%.
The problem is, buyers are looking not only at this particular property, but also at other competitive properties. Chances are that many of these competitive properties have been on the market long enough to have had price reductions and be at the proper fair market value asking price. This makes the improperly overpriced property glaringly overpriced.
When an overpriced property sits on the market for a long time, it tends to get “old.” It racks up a lot of time in the MLS and indicates to the buyer that either something is wrong with the property or the property owner is getting desperate, even though this may not be the case. Neither may be true, but that is what goes through the buyer’s mind.
Either way, when a buyer makes an offer on a property that has been sitting around too long, the buyer tends to come a much lower offer.
There is a saying in the real estate business that goes like this, “Let me be your third Realtor®.” The reason for this is that when a property owner overprices their property, it will typically not sell during the 6 month listing period. The property owner will blame the listing real estate agent for not advertising their property enough. Then the owner will relist the property with a second real estate agent. When this exact scenario plays out again, the owner moves on to their third real estate agent. By this point, owners tend to be tired of having their property on the market for so long and will finally price it competitively.
The shameful thing is, to the buyer’s thinking the property has been on the market for a very long time. Buyers assume that either something is wrong with the property or that the owner is desperate to sell. The buyer will then come in with an offer much lower than they would have previously and the frustrated property owner will negotiate their property to sell lower than fair market value.
Because of the above scenario, I have said many times that I could make a good living on the amount of money property owners lose due to greed.
Unless the property is being purchased for 100% cash (no mortgage) which is not common, then any inflated sale price will not be approved by the lending institute anyway. The lending institute will not put a mortgage on a property unless it is sold at fair market value or below. Therefore if a property did sell above market value, it is not likely to close.
In addition to the above, most buyers who can pay 100% cash for a property are likely savvy enough to have a good quality analysis done on a property before they make an offer. This is to avoid overpaying for a property. Ergo, cash buyers typically do not purchase overpriced properties.
When a property is properly priced, it will typically sell within the first 30 days for the highest amount. Ironically, when property owners remove the greed factor they make more money on their sale. It is just one of those paradoxes in life. Greed often stings you in the end.
Lastly, when the fair market value of the property is known, it should then go on the market for a reasonable amount above fair market value for the proverbial negotiation game. The best list price for most properties will be ~5% above the fair market value. When a property is properly priced, there is little need to move off the list price very much and will attract more buyers and likely a sale.
Price it right and get the most from the sale of your property without all the headaches and inconvenience of having it on the market for months on end.
Mark Lenson
Broker / Owner
Lenson Realty, Inc.
Mark & Annmarie Lenson have personally sold over 800 properties in 29 years selling real estate in South Florida. They have offices from Orlando to Boca Raton, Florida with 107+ agents. Mark & Annmarie won every award a major national franchise had to offer. Mark is a real estate instructor, has been on television and has written numerous real estate articles.
Orlando – Vero Beach – Fort Pierce – Port St. Lucie – Stuart – Jupiter – Palm Beach Gardens – West Palm Beach – Boynton Beach – Delray Beach – Boca Raton – Fort Lauderdale – Hollywood – Deerfield Beach – Lighthouse Point – Wellington
&
Kissimmee – Cocoa Beach – Melbourne – Palm Bay – Sebastian – Hutchinson Island – Jensen Beach – Palm City – Port Salerno – Hobe Sound – Tequesta – Riviera Beach – Lake Worth – Ocean Ridge – Manalapan – Pompano Beach – Lauderdale By The Sea – Oakland Park – Dania Beach – Hallandale Beach – Loxahatchee – Royal Palm Beach – Okeechobee – Indiantown