Pricing your home too high can scare off buyers. A common mistake home sellers make is listing their home too high. While it may seem like a better strategy to list high and reduce later, this strategy can actually cost more in the end. Your home may stay on the market for a longer period of time and buyers might start to feel like there is something wrong with the home.
We’ve all seen it. Two, seemingly similar, homes for sale. One is sold in a heartbeat and the other sits on the market. A recent study conducted by Realtor.com and the National Association of Realtors, identified the main attributes and amenities that are impacting a homes time on the market. Check out this infograpic for all the details.
Real estate lost a lot of value during the recession but most areas have rebounded considerably. In some cases, the homes are worth more than they were before the housing bubble burst.
The dynamics are classic for this type of market: inventories are low, mortgage rates are low and demand is high. All price ranges are on the rise with some at an even higher rate because the short supply is causing competition among buyers.
Another reason many homeowners’ may have more equity is simply not staying current with what is going on in the market. In a recent FNMA study, it indicates that 23% of owners believe they have negative equity in their home when actually, it is 9%. 37% believe they have greater than 20% equity in their home when actually 69% of homeowners do.
Even if you’re not planning to sell your home, knowing the value helps you understand your financial position better. Home equity debt up to a $100,000 limit is tax deductible and can be used for any purpose. Owner’s commonly refinance to eliminate mortgage insurance, consolidate mortgages, pay off higher interest rate debt like credit cards or student loans or to buy out an ex-spouse’s equity.
Be aware that an automated value model like Zillow Zestimates uses algorithms to determine a price and while it might be in the ballpark, AVM results may only be accurate about 20% of the time. A comparable marketing analysis or broker’s price opinion will be more accurate due the subjective approach that will be used by an agent with personal experience in the area. An agent will consider factors like condition, floorplan, marketability and demand.
“If I tell you it’s going to rain, you can put the buckets on the porch.” If you grew up in the south, you made have heard this expression when a person is testifying to the veracity of his word. If you know a person and/or their reputation, you know whether you can trust their word or not.
However, with a stranger such as a buyer, the seller doesn’t know whether they’ll live up to the terms of the contract or not. Buyers submit earnest money along with a contract to demonstrate their commitment to the terms of the offer.
The more earnest money that the buyer deposits indicates to the seller a higher level of commitment to the contract. Except for stated contingencies in the sales contract, if the buyer fails to close on the sale, the earnest money may be forfeited. Significant earnest money makes the seller feels more secure that the contract will close.
There certainly are a lot of things that can dictate how much earnest money is appropriate. Local customs, price of the home and type of mortgage can all help to determine the proper amount. In some areas, it may be common for it to be 1-5 percent of the purchase price. In other areas, it might be a specific amount like $1,000 to $10,000 depending on the sales price. It really comes down to whatever the buyer and seller agree is the proper amount.
Another strategy is to put up an adequate amount initially until you get through the inspections or contingency period and then, to put up an additional amount when the contingencies have been removed.
The earnest money demonstrates the buyers’ sincerity in making the offer and proceeding according to the agreement so the seller can take their home off the market and start making plans to move and give possession of their home. Ultimately, both parties want to close as anticipated according to the contract and the earnest money helps facilitate that.