Appraisal Scoop

Selling Your Home Yourself – Pricing It Appropriately

When you’re selling your own property, whether it’s a house, townhouse, condo, apartment, a finished lot, raw land, a farm, a ranch, or whatever, the first thing to get right is the price you ask for it. If you work with a broker, the legwork is done for you. When you work as a FSBO (for sale by owner), you need to figure it out yourself. Let’s look at how to do just that.

Setting a Price: First, don’t make the mistake of looking only at what you need to get out of it. It’s important to know that, of course, but that number may, or may not, have any relationship whatsoever to market price. It may be lower or higher than market price. The first is situation is great. The latter may require you to rethink whether you want to sell your property at this time.

If you price your property below market price, it’ll be snapped up quickly. The problem, of course, is you’ll leave a lot of money on the table. This will lead to a lot of seller’s remorse.

If you price your property above market price, it may sit there unsold until the cows come home. If it’s priced very much above market price, people won’t even come and look at it. The market place talks and it talks loudly.

So What’s Your Goal? Click below for the rest of the story . . .

FSBO Sites Collaborate for National Coverage

An interesting new online for-sale-by-owner company According to RealBlogging: "By Owner MLS, has just announced a free, online, public-domain listing service, linking together the homes, condos, timeshares, rentals, vacation homes, town homes, multifamily homes, vacant and commercial properties of many different FSBO companies. No registration is required and every property is linked back to its originating for-sale-by-owner site."  For more information go to ByOwnerMLS.com.

This is an interesting "collaborative" business model on several levels. 

• They're pulling together (or linking) the previously fragmented property sites listed above into a an easy to use search engine. 
• They don't require that the user "register" to use the search engine (lead generation).
• The standard and advanced search engines are easy to use.
• There is an Appraise Now! feature from the listing page.
• From the listing page you can also click on (More listings in "Your County")

Free Online AVM or Traditional Appraisal - What's The Difference?

Brian J. Davis, RAA of Brian J. Davis & Associates of Bloomington, IL says, "If you're planning on selling your home yourself (FSBO - Fizzbo) you may save a lot of time and aggravation by having a professional pre-listing appraisal of your property completed by a certified residential appraiser."

"You can try doing some research on your own using the local multiple listing search tools, the online assessor databases, or maybe one of the many Internet "What's My House Worth?" sites . . .but data is NOT information. 

The “Free” reports found on the Internet typically fall under two categories: Lead generation or Published Public Information.

Lead Generation: This type of website will offer to provide you with a Report in the form of a BPO (Broker Price Opinion) or BMA (Broker Market Analysis) regardless of the name. These reports are not USPAP (Uniform Standards of Professional Appraisal Practice) compliant and are done by real estate professionals not formally trained to value a home.

Additionally these reports are often fed to new Real Estate Professionals to the market who are hungry for business and are new to the market, not the seasoned Real Estate Agent as a best case. Most importantly, these professionals benefit from the value of the home by either commission or related business (spam, cross marketing your information, or dependent product sales such as Title searches), which means that the information you are receiving may be biased by an ulterior motive.

Published Public Information: These websites are a great resource for the curious consumer. It allows for general estimates of what property could be valued based on last known public/tax records.

You can reach these records by heading to the county office, but innovative websites such as Zillow.com effectively format information into an easy to read and interactive media. Zillow is careful to caution that they only have access to what data is available (occasionally dated/incorrect) and in complex or rural situations may not be complete or consistent with what the market trends reflect real time. The report presented here is not an appraisal nor can it be used in any format other than to test the waters as to where your value of home may be plus or minus a certain percentage (I’ll leave that up to Zillow to tell you).   READ MORE . . .

How To Select An Appraiser

Finding the right appraisers can be the key to a smooth running closing process for lenders. So, how do lenders evaluate whether an appraiser is right for their institution?  Those who are the most productive and accurate, and are the easiest to deal with share several traits.

Here are a few factors to consider when evaluating an appraiser:

No substitute for experience: Look for an experienced appraiser. You cannot measure an appraiser solely on the length of time he or she has been in the business (although that's certainly important). You should also look at licenses and other designations, such as commercial or residential designations.

ABO - Appraised By Owner: Tips For Pricing Your Own Home

Professional appraisers sum it up in three words - buyers make value. Ultimately, the value of your home is what a reasonable buyer is willing to pay within a reasonable time.

Setting an asking price for your home requires that you anticipate what most buyers would be willing to pay. This requires a close look at comparable home sales in your area, as well as making an assessment of the state of the real estate market itself. Pricing correctly is fundamental to the successful outcome in the sale of your home.

Market Analysis Homes listed for sale and recent closed sales in your area will usually provide relevant comparable data for pricing your home. Closed sales show market confirmed prices, while listing prices indicate the current trend in pricing. Later, when your home is appraised for the buyer's loan, the appraiser will [predominantly] consider recent closed sales. Asking prices [may] be considered. A sales price that is solidly based on recent sales of similar homes will not have a problem when the price is later reviewed by an appraiser. If your home is superior or inferior to most homes in the neighborhood, or if there are few or no nearby sales, then anticipating the responses of potential buyers will be more difficult. In this case, a trial and error strategy may be necessary. This is a sensitive area and requires a realistic assessment of your home and its market. For example, one very nice home was continually rejected because it had the master bedroom upstairs, and it was located in an area where most buyers were over the age of 45, with older children.

Real Estate Market An important aspect of pricing is an assessment of the state of the real estate market. The market may favor buyers or sellers, or be in balance. An indicator of the quality of the market is the number of months of standing inventory in your market and price range. Consider your market area to be all neighborhoods that offer competing choices for your potential buyer. Here is how to do that:

• Count the number of sales in your market area and price range for the past 12 months.
• Divide the number of sales by 12, to get the number of sales per month (sales rate).
• Count the number of homes on the market now.
• Divide the number of homes on the market by the number of sales per month (sales rate).

This will show you the number of months it will take to clear the current inventory.

Seller's Market Less than 6 months of standing inventory is considered a seller's market. In a seller's market the number of buyers is large in proportion to the number of homes for sale. The demand for homes is greater than the supply. Buyers must compete with each other for the available inventory. There may be multiple offers received shortly after a property goes on the market. Buyers will submit the highest possible price and terms that the market will support. Prices will trend upward. In a climbing market, pricing slightly above recent sales is appropriate.

Buyer's Market More than 8 months of inventory is considered a buyer's market. In a buyer's market the number of buyers is small in proportion to the number of homes for sale. This situation can be created by high interest rates, employment decline and excessive building. A low number of buyers equals a lower price. Sellers must compete with each other for available buyers. Prices trend downward. In a falling market, prices should be set at the lower end of the range, because time works against you. In six months prices may be lower. This may be difficult to do, especially if your home was purchased at a higher price.

Price Per Square Foot Dollars per square foot is often used as tool for comparing homes of varying sizes to determine a list price. When price per square foot is used, it is important to keep in mind that you must make a sliding scale adjustment from larger to smaller homes. In other words, the larger the house, the lower the price per square foot for comparable homes. This is because the core square footage of a home has a higher value than the peripheral area. For example, the price per sq. ft. on a 1,000 sf home will be much higher than a 5,000 sf home, with other things being equal. We usually graph the neighborhood prices per sq. ft. to get a visual picture of the market in the neighborhood, as well to see how much the price per square foot declines from smaller to mid-sized to larger homes.

Should you price high, and hope for an offer? Houses should not be priced over the market. This is not the best way to position your home for several reasons:

• Your home will be shown to the wrong group of buyers, from whom you need an aggressive negotiator - someone who will make a low offer.
• You will inadvertently help to sell the competition. Your high price will convince buyers that another home is a good value.
• Your days on the market is evident to buyers, and is a subtle but important factor in their decisions. Your best leverage occurs during the early marketing period.

How will you know if the price is correct? The best affirmation of correct pricing is second looks from buyers. This indicates that your home appeals to buyers in your price range. There may be a few nibbles before a buyer comes forward who is ready to act. It helps to get feedback from Realtors and potential buyers. Keep in mind that they will often be reluctant to say negative things. The summary of feedback is more important than what they say. Are you getting nice rejections or are you getting second looks?

How will you know if the price is incorrect? You may have steady showings, but lukewarm responses. This indicates that are buyers, but they have other choices with more competitive prices. Or, you may have very few showings. In this case, the buyer pool for your area, or for the style or condition of your home is small. This will require a strategy of more competitive pricing and a longer marketing time. Remember that a small buyer pool, for any reason, is a "buyer's market" and requires more aggressive pricing.

How long should you market a home at a given price? There is no uniform time frame for marketing at set price. I think about 8-10 showings is a reasonable number for feedback regarding the price. This usually corresponds to about 2 - 6 weeks for an average home in a balanced market. About 30 days marketing time for a given price could be good a rule of thumb. However, this may be too short for your home if you have an unusual or very high end home for which there is a small market. Or, 30 days may be too long for your home if you need to move fast.

What happens if your home does not sell in a reasonable time? If your home has been on the market for months with no offers, you have been given a clear message that the price is set too high. This is particularly true if showings have slowed down and there are few prospects coming to see it. What you do at this point depends on whether you really need to sell. If you're not really motivated to move soon, you can always wait for the market to catch up to the price you want. It would be best to take your home off the market and wait for better conditions. Buyers become suspicious of a house that's been for sale for a long time. If you need to sell, consider a schedule for dropping your price until it reaches a level that attracts buyers. There's no reason to say, We simply can't sell our house. Houses will sell if the price is right.

How can you get top dollar for your home? Although buyers will not pay more than market value, they will pay a premium for homes that are in excellent condition and well presented. With good condition and presentation, you can reach the high end of the price range achievable for your house. We will work with you to "create value" before your house goes on the market. When it goes on the market, we will make sure that your home is show beautifully to a wide audience.

Article Source: The Sideroad Blog Author: Roselind Hejl, CRS, is a Realtor with Coldwell Banker United in Austin, Texas. Her website: Roselind Hejl's Austin Texas Real Estate Guide offers a wealth of knowledge about the City of Austin, homes for sale, real estate market trends and buying and selling tips.

Price Your Home Right To Help Speed a Sale

The Wall Street Journal's Real Estate Journal published a somewhat simplistic but positive article [ Price Your Home RightTo Help Speed a Sale ] on the importance of getting one's home appraised by a professional appraiser prior to putting it on the market . . . .

With home sales slumping and inventories on the rise, experts say getting your home sold depends a lot on pricing it correctly. One tool sellers can fall back on when the market is shifting is a home appraisal.

You can have an appraisal done before you contact a broker or if you're just curious what your home would be worth. They cost, on average, from $250 to $400 for a single-family home, slightly more for multiple-family dwellings.

An appraiser will physically inspect your house for shoddy workmanship or needed repairs, measure its dimensions and takes notes on the floor plan, utilities and other factors that affect pricing. He or she should also look at three or four "comps" -- comparable homes in your neighborhood that have sold within the past six months -- and analyze how homes currently on the market are faring, says William J. Doka, owner and president of Erickson Appraisal Company in Fair Lawn, NJ.

That's a more comprehensive assessment of market conditions than the free comparative market analysis, or CMA, that a broker will give you, says Doka. He cautions that brokers want to earn your listing and can be tempted to paint an overly rosy picture of how your home will sell while appraisers, although sometimes subject to similar pressure from mortgage brokers, strive to be objective.

The results of the appraisal will be presented to you in a report that can run from five pages, for a simple summary that suits most lenders and homeowners, to 50 pages or more for a "narrative" that banks might demand before financing the purchase of a multimillion-dollar home. Homes are typically listed for sale at a price several percent above the appraised value.

Predictably, most of Doka's business comes from lenders, who typically require an outside appraisal before making a loan. But homeowners are also hiring him before contacting a broker. He charges from $350 to $400 to appraise a single-family home. Some things to remember when looking for an appraiser:

• Make sure the appraiser is licensed by your state.
• Ask how long the business has been around,
• what professional education the appraiser has had and
• what organizations (snip) the appraiser belongs to.

Other related articles in Appraisal News for Real Estate Professionals:

ABO - Appraised By Owner: Tips For Pricing Your Own Home

Tips For Selling Your Home - FSBO

How Much Is My House Worth?

Tips For Selling Your Home - FSBO

Homes that are listed For-Sale-By-Owner, without the assistance of a real estate agent, are known as FSBOs (pronounced FIZZ-BO). Selling your home "on your own" will require a significant amount of "homework" if you're going to do it right. One piece of advice that is consistently given by the FSBO experts? Do NOT "Overprice" Your Home!  It's very hard to be objective about your own home because of your emotional attachment to it.

As you read through this tips, from a variety of FSBO experts . . . . See if you can find the "common thread"!

Don't SELL Yourself Short

FSBO Basics suggests: "If you are selling your home without OR with a real estate agent you should get an appraisal before you set the selling price. A real estate agent's market analysis will get you in the ball park but do you want to stumble around in the dark with your hard earned equity? I know a retired couple that set their selling price based on the agent's analysis. The house sold in three days and the appraisal [for the lender] was $20,000 above the selling price. It can be just as bad if you price it too high and it doesn't sell. An appraisal will have to be done anyway. Why not get it upfront so you can protect your equity?" "Keep in mind that no two appraisers will come up with the same exact value to the penny. Market changes and sales in your neighborhood can impact the value in a short period of time. However, it is far more accurate than a market analysis. Don't sell yourself short. Having an idea in what is involved in appraising a piece of property can greatly help in maximizing the appraised value and avoiding costly details and re-inspections."

Pre-Listing Advice and Preparation

The Real Estate Perfect blog in their post "Top 10 FSBO Tips to Selling Your Home by Owner " says; "There are only two legitimate and well-recognized ways of determining a fair market value. One way is to contact a real estate agent or broker to provide you with a CMA otherwise known as a comparative market analysis. " "The best and most accurate way of determining price comes from a full-blown appraisal done by a professional real estate appraiser."

From the Death & Taxes blog; "Before your home is placed on the market, a good realtor will talk extensively with you about setting a listing price, taking into account things like sales of comparable homes and the state of the local real estate market. To this end, I think it’s a great idea for FSBO sellers to spend $300 or $400 to obtain an appraisal of their home by a licensed Illinois appraiser."

"People using the FSBO approach are notorious for listing their homes at a price that’s unrealistically high; instead of letting your ego or lack of market knowledge get in the way, find out what your home is really worth. You will also want to put yourself in a prospective buyer’s shoes, and think about what repairs and/or improvements should be done to the home before it’s put up for sale."

Don't Overprice Your FSBO Home  . . .click here to continue reading!