Sellers have three main factors to consider when determining the listing price of their home. All of these are important. Your personal situation will dictate which one ranks highest on your priority list.
Price
Obviously, sellers want to get the highest price for their homes no matter their situation. But for some, selling is necessary because they are in financial peril. Money is the most important factor. Actually, it is the only factor.
If you want to get the highest price, what is the best strategy? Do you price the home low and let the competition drive the sale price? Or do you start high, knowing that you can always lower the price later? In my opinion, the strategy comes down to the seller’s personality and lifestyle. Some people simply don’t like games and competition. They want the best buyer who loves the home to be their buyer. Some people don’t want a lot of showings because they have young children or pets which makes it hard to arrange quick departures. So the prior strategy might not work for a number of situations.
The later strategy of pricing high comes with its own set of warnings. Sure, a new listing will stir up a lot of activity. Buyers will have questions and want to get in for a showing. But what if the price is too high and no offers come? We all know how buyers tend to watch the days on the market (DOM). If a home sits for too long, buyers start to wonder what’s wrong with it.
Be careful. Do your research. Listen to your agent. And work together to decide which pricing strategy works best for your goals.
Closing Date
For some, the closing date is the most important factor. Many situations are dependent on timing: for those who are relocating, starting a new job, or already have another home under contract, for example. Timing is important to everyone but for some, closing dates can make or break a deal.
Financing
Financing is the most crucial aspect of real estate transactions. It dictates important elements such as when we can close, how extensive the inspection will be, and if there will be an appraisal. Worse yet, the seller is virtually completely dependent on the lender and buyer to keep the lending process moving along successfully.
Initially, sellers care less about the buyer’s financing than their agents. While the sellers are looking over the offer price and closing date, their agent will quickly flip to the financing section. We’re looking for strong buyers with secure financing. Cash is the most secure. Cash transactions are less likely to fall through because of lending hiccups such as low appraisals, credit scores, employment situations, etc. But most buyers do not have all cash and need to finance the home. In this case, agents look at the details of the buyer’s mortgage. We first look at the type of financing (conventional, FHA, VA, etc.) then we look at the down payment amount. The most desirable offer is the one with the highest down payment. Among other things, higher down payments show the stability of the buyers. Sometimes higher down payments mean the buyer is so strongly backed by the bank that the appraisal is waived.
Sellers, trust your agent when discussing offers! Having a transaction die at any point in the process is heartbreaking and exhausting. Most of the financing portion is out of your control so let your agent’s expertise guide your decision.
Each seller will know what is most important in their personal situation. There is no right or wrong priority. Communicate with your agent so they can help market effectively to get what you need in the home sale. This process is innately stressful enough. Make your agent part of your team to get your home sold!
