People come up to me all the time and ask, "How's the real estate
market doing?" Although I would really enjoy giving a simple answer to
this question, the real answer is far more complex. In certain parts of
the country, the housing market has been stronger than in many other
areas, although, prices often fluctuate, even within the same area. However, many homeowners who list their homes have listed them
at unrealistically high prices, and then been inflexible in terms of
reducing their price. I have observed homeowners list their houses at
prices higher than homes sold for at the peak of the market, and then
becoming disappointed when their homes don't sell. Some homeowners
explain their asking price by explaining how much money they have put
into their homes, or how beautiful and exceptional their house is.
Often, these same homeowners have owned their houses for many years, and
they seem to conveniently forget how little they originally paid for
their houses. Yet, the reality is that the price one receives for one's
house is not related directly to how much one may have paid, or how much
one may have put into the property. In the end, houses generally sell
based on what buyers are willing to spend for the house, and that is
generally related to the real estate market at that time.
It is also important to understand that the listing price is often far different from the selling price, and that neither the homeowner nor the real estate agent actually determine the eventual selling price. This is only determined by the marketplace itself, as well as by an individual buyer. In addition, even if we assume that someone might be willing to over - pay, since the vast majority of buyers do so via mortgages, lending institutions base how much they will lend, on what their appraiser values that home at. That is where the familiar expression, Comp - Out, is often heard.
These homeowners are generally hurting their own chances of selling their homes by listing their homes at unrealistically high prices. Houses that are "priced right to sell" from the start have a far better chance of selling than those priced too high. Today's buyers study the internet, and many realize what comparable houses are realistically selling for. A basic reality of real estate is that in most cases, the best offer a homeowner will receive for his house is received in the first few weeks after it goes on the market. New listings are "hot" to potential buyers, while houses that remain unsold often elicit questions from buyers as to what was wrong with the property - why it hasn't sold?
Many owners interested in selling their homes interview several real estate agents and brokers, and ask for recommendations as to pricing, as well as many other questions. Many owners want to believe the agent that tells them their house is worth the highest amount, as if saying it will automatically bring forth a higher price. Instead, owners should demand a professionally prepared Comparative Market Analysis, including pricing and a marketing plan from their realtor. In most cases, a homeowner will do best going with an agent that acts professionally, markets professionally, and justifies both the pricing, and how the marketing plan will work.
In addition, even if a "stranger from another planet" decided to pay an unrealistically high price for a house, most buyers need to get a mortgage to finalize the funding for the purchase. Lending institutions, for a number of reasons including some unwise lending decisions during the height of the real estate "bubble," are doing far more complete and conservative comparative market analysis of their own, and if this comparison (known as "Comps") do not justify the price being offered, the lending institution will deny that amount of funding because it does not "comp out."
Since for most individuals, their home is their most valuable asset, doesn't it make sense to objectively ask the same questions as an owner that potential buyers will ask? The main question should be, "How does this house compare with comparable homes in comparable areas in comparable condition? Owners should also ask, "If I were buying a home, would I pay that much for this house?"
It is also important to understand that the listing price is often far different from the selling price, and that neither the homeowner nor the real estate agent actually determine the eventual selling price. This is only determined by the marketplace itself, as well as by an individual buyer. In addition, even if we assume that someone might be willing to over - pay, since the vast majority of buyers do so via mortgages, lending institutions base how much they will lend, on what their appraiser values that home at. That is where the familiar expression, Comp - Out, is often heard.
These homeowners are generally hurting their own chances of selling their homes by listing their homes at unrealistically high prices. Houses that are "priced right to sell" from the start have a far better chance of selling than those priced too high. Today's buyers study the internet, and many realize what comparable houses are realistically selling for. A basic reality of real estate is that in most cases, the best offer a homeowner will receive for his house is received in the first few weeks after it goes on the market. New listings are "hot" to potential buyers, while houses that remain unsold often elicit questions from buyers as to what was wrong with the property - why it hasn't sold?
Many owners interested in selling their homes interview several real estate agents and brokers, and ask for recommendations as to pricing, as well as many other questions. Many owners want to believe the agent that tells them their house is worth the highest amount, as if saying it will automatically bring forth a higher price. Instead, owners should demand a professionally prepared Comparative Market Analysis, including pricing and a marketing plan from their realtor. In most cases, a homeowner will do best going with an agent that acts professionally, markets professionally, and justifies both the pricing, and how the marketing plan will work.
In addition, even if a "stranger from another planet" decided to pay an unrealistically high price for a house, most buyers need to get a mortgage to finalize the funding for the purchase. Lending institutions, for a number of reasons including some unwise lending decisions during the height of the real estate "bubble," are doing far more complete and conservative comparative market analysis of their own, and if this comparison (known as "Comps") do not justify the price being offered, the lending institution will deny that amount of funding because it does not "comp out."
Since for most individuals, their home is their most valuable asset, doesn't it make sense to objectively ask the same questions as an owner that potential buyers will ask? The main question should be, "How does this house compare with comparable homes in comparable areas in comparable condition? Owners should also ask, "If I were buying a home, would I pay that much for this house?"
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