Check out the next podcast in our series on buying and selling here and now!
Today Marcia and I explain pricing your property as a seller and its importance in how your sale will turn out.
René Nelson, Eugene commercial real estate broker
Marcia Edwards, Eugene residential real estate broker
Buying & Selling in the Current Market – Part 7
René Nelson: Marcia, let’s talk about pricing residential. Walk me through your system.
Marcia Edwards: Well, before I go there, I want to give you a, “Don’t be this seller,” situation. I went and showed homes in Santa Clara this morning, and there’s some people that priced their home above what things are selling for, excessively anticipating what the result will be in the market today, and you can’t really anticipate what your sales price is today.
It’s odd to say that as a realtor. You can do an educated guess, but the market is really unpredictable and appreciating at a crazy rate. So what we’ve gotta do is we’ve gotta look at the situation with a bump down. You should price based on what’s been proven historically, even if it was last week, a couple of properties that sold, but don’t price forecasting an additional appreciation or you’ll miss the market. So if you’re at 350 then you’re going to see everyone at 350 and below, you go to 355, you’re missing everyone below 350 in your search parameters. So you eliminate a lot of the heat by going too high, too aggressively, too fast.
René Nelson: That’s really good insight. Plus, if someone gets crazy in a bidding war and they start bidding up and now they’re at 360, because they’re trying to entice your seller. If your seller says, “Oh, let’s take that offer, ’cause it’s top dollar and that’s what I want,” you’re going to have a hard time supporting that with comparable properties, and that deal is probably not going to close if they’re getting financing. Right?
Marcia Edwards: That’s right. There’s… More than 30% of the sales, right now, are cash. So you also gotta… You’ve gotta balance. You’ve gotta be able to either guarantee that, if it does not appraise, you’ll pay the difference as the buyer and absorb that risk, or you’ve gotta understand that you’re going to have to compete and take the risk as a buyer at putting your neck out a little bit in pricing, despite the appraisal. As a seller, what you’re suggesting, that’s the value and the treasure of a cash offer is there’s no appraisal that will adjust for a cap in your sales price.
René Nelson: Okay. So you said something really good. Let’s circle back to that about, as a buyer, committing to pay the difference in cash, if it doesn’t appraise. Walk the listeners through that. I know you do it every day, but walk us through it.
Marcia Edwards: So in financing, there is… Part of the process is getting it appraised. So not to the benefit of the buyer or the transaction, but to the benefit of the lender to make sure there’s sufficient collateral available in that house to re-sell it if that buyer walks on the lender.
So in that process, what they’re doing is making sure they can justify the sales price. If it does not appraise at the price of the sale, so there’s usually a gap of maybe $10,000 to $20,000, you want to cap what you’re willing to do, but you may want to cover that gap and say, “Hey, we’ll bring in another 10 to make this continue, even if it does not appraise.”
René Nelson: Okay. Good information.
If you’re a seller trying to make the most from your investment property, René is here to help. Schedule a 15-minute discovery call to better understand your investments and the market today.
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