Luxury Valley Homes Arizona Real Estate Blog: Selling Your Home – Maximize Your Return | LuxuryValleyHomes.com

Selling Your Home – Maximize Your Return | LuxuryValleyHomes.com

Selling Your HomeSelling Your Home - Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house?

Here are two keys to ensure that you get the highest price possible.

1. Price it a LITTLE LOW

This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below). 

Selling Your Home

Selling Your Home

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each other over the house. Realtor.com gives this advice:
"Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This, too, may seem counterintuitive. The seller may think they would make more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional. A new study by Collateral Analytics, reveals that FSBOs don’t actually save any money, and in some cases may be costing themselves more, by not listing with an agent. In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:
“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”
The results of the study showed that the differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%. Sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.
 
Jeff Daley
Look at our Infographic - Fall Inventory Slows showing the lack of existing inventory going into the fall quarter.
Comment balloon 1 commentJane & Jeff Daley, PhD • September 25 2017 07:48PM

Comments

Regarding the 2nd point, I'm not sure the conclusions can be broadly applied.  The study focuses on 13 highly populated counties only.  Only 150 counties (of over 3,000 counties) in the US comprise 50% of the population.  The study uses AVM methodology as a tool to derive their results.  AVM models do not work well in low population housing markets.  Maricopa County was one of the counties in the study so it might be more relevant given your location. Extrapolating urban results to rural areas is risky.

Also, it does not appear the study excluded Flat Fee Listings, which are typically used by FSBO sellers to advertise in the MLS.  Including Flat Fee Listings as agent represented most likely leads to overstating agent represented results and under-representing FSBO results. 

 

And one comment my stat professor consistently mentioned: "Correlation does not necessarily mean causation"

Posted by Mel Ahrens, MBA, Kelly Right Real Estate, Customized Choices for your Real Estate Needs (Kelly Right Real Estate) 11 days ago

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