Price it Right
If you want to be a successful seller, you must learn to think like a buyer. You probably didn't buy the first house you looked at. Few people do. On the contrary, today's home buyer spends weeks, even months, examining houses. To avoid over paying, many become experts on property values.
Remember, you can ask any price you want for your house. But it's not going to sell until you find a buyer who agrees it's worth the price you are willing to accept. And, since most buyer's obtain a new loan to finance today, the price also has to be what the lender agrees it's worth as collateral for the loan. Smart seller's know that while only one person sets the price, two people, a seller and a buyer, make a sale.
You can select the price for your house in many ways. You can use the "asking prices" and "sale prices" of comparable homes from a Comparative Market Analysis (CMA) to "factually" determine your house's value or you can base it on needs, poll friends, pay for a professional appraisal, or interview dozens of real estate agents until you find one with suitably elevated opinions of its worth. In the final analysis, they are all variations of two pricing methods.
Four Phase Pricing
This is prevalent, but ineffective. For a smart seller, pulling an unsubstantiated price out of the air is unacceptable. You could over value the house and become involved in a painfully slow marketing process that ultimately results in a lower offer. Or, you could under price it and risk losing money. Unrealistic seller's usually go through four distinct pricing phases prior to sale:
Ironically, instead of getting fair market value with Four Phase Pricing, this method usually stigmatizes a property and reduces the eventual sales price to less than it would have been with more realistic pricing. This is why:
Pleasure, Pleasure, Panic Pricing
This is the method you can use to sell your house quickly and get the highest dollar. The key to this method is to establish a very realistic asking price when you first put your house on the market. You establish your asking price by analyzing houses comparable to yours in size, age, condition, location, and amenities. You use houses that have sold within the last six months as a basis for establishing the fair market value range. You also use houses currently on the market but you look at these to recognize trends (up and down) in the market. Don't be misled by houses currently on the market and use them as a basis for asking price. Remember, lots of sellers are using the Four Phase Pricing method!
This scenario explains how Pleasure, Pleasure, Panic pricing creates a seller's market even in the midst of a buyer's market. This method put intense pressure on buyer's to perform quickly and at top dollar. Spirited competition forces buyer's to pay top dollar for your home.