When homeowners are asked what the most important criteria are in selling their home, the reply is often, “To sell at the highest price in the shortest amount of time.” While it’s natural to think that way, the current economy requires a more strategic approach, one in which sellers concentrate first and foremost on their primary objective: the reason why they want to sell in the first place.
 
Once the decision is made to sell, the next steps are selecting a qualified agent and establishing an asking price. The second must not be done before the first. When choosing an agent, review his/her experience, services, and marketing plan. Do not choose someone solely on the fact that he/she agrees with your asking price. For help with this process, review the Ten Questions to Ask a REALTOR®.
 
Real estate agents don’t establish value, the market does. Under no circumstances should you pick an agent based on price. The best agents have the confidence to tell you the truth about the market. Ideally, you should select an agent based on the criteria mentioned above; then together you can determine the asking price of your home.
 
So how do you settle on that magic number? Before answering that question, think back to when you purchased the home. How did you determine what to pay for it at the time you bought it? Most likely you and your agent compared it to all the other properties that met your criteria and arrived at a value based on that comparison. Buyers still comparison shop, and have a greater advantage today because of the sheer amount of information available on the Internet. (One thing to keep in mind is that the Internet often only discloses the asking price. Your agent will research the sales price – a truer gauge of the market.)
 
In the same way that you compared properties when it was time to buy, you will need to make comparisons if you truly want to sell. Your agent will prepare a document called a “Comparative Market Analysis,” or CMA: a report that compares the location, size and amenities of your home with recent sales and other comparable homes currently for sale in or near your neighborhood. 

In evaluating this CMA, it’s important to point out:
 
“Actives” represent the upper end of your price range; “Solds” represent the reality of the market. “Solds” are the most important stats to use in your evaluation. Your asking price should be at the top range of the “Solds” and the bottom range of those “For Sale.”
 
Your agent may include in the CMA the “Expired listings,” or those homes that didn’t sell. They represent the “out-of-range” price point. If you price your home in this “out-of-range” category, your home will not sell either. To receive the most amount of money in the shortest amount of time (the stated goal), you must price at market value. Think of the CMA the way a doctor thinks of an X-Ray: it shows precisely what’s going on so an informed decision can be made.
 
Consider these terms when determining your asking price:
 
Cost – The amount you paid plus the cost of capital improvements.
 
Price – The amount being asked for the home.
 
Value – What a home is worth to one person in an isolated situation.
 
Market Value – The amount that would appeal to many people and cause a sale within a reasonable period of time.
 
If you accept the above definitions, you must agree that there is no relationship between cost and market value. This is one of the most difficult points for a homeowner to accept. Value is a function not of what you have in your home, but in what you can get out of it.
 
Some sellers find themselves in the unenviable position of having to sell before they’ve had a chance to build equity in the home; others realize their home’s value has dropped below what they paid for it.
 
In both situations, sellers are left with a tough choice of whether to sell at a loss or stay in the house. The question to ask is, “Do the benefits of moving exceed the amount of the loss?” 
 
If you must sell now, take your time and choose an agent in whom you have confidence; one who will put your best interests first; one you will respect enough to listen to – even if the news is not something you want to hear. Then collaborate to arrive at the best price.

Have you recently sold your home? How was the asking price established? Let us know about your experience.

Posted by:Noreen Smith