Private_Sale__FSBO__Property_Pricing

							Title:
Private Sale (FSBO) Property Pricing

Word Count:
1550

Summary:
Getting the asking price right is t
he most important part of selling y
our home whether selling through a
real estate agent or FSBO. Find out
 how to value your property correct
ly and how to maximise your equity.
Keywords:
private sale, property price, real
estate, FSBO, For Sale By Owner, pr
operty, home sales, equity, FSBO va
luation, property valuation, tips f
or homeowners, real eastate tips,

Article Body:
The property price dilemma

As a homeowner selling your home yo
u are faced with a dilemma when set
ting the asking price for your prop
erty. Ask too much and you risk you
r property sitting on the market fo
r months without attracting any off
ers. Ask too little and you lose ou
t financially. Faced with this choi
ce many homeowners set their asking
 price too high believing that they
 can always lower the price if the
property doesn_t sell. However this
 can have disastrous consequences f
or the value of your home.

Setting the correct price is the mo
st important part of selling your h
ome. Whether selling your home FSBO
 or through a real estate agent it
is vital to get the asking price ri
ght first time. Your aim is to sell
 your property in a reasonable amou
nt of time and to get on with livin
g your life, in order to do this yo
u must set a realistic price.

Buyers know the real estate market

Buyers are often well researched wh
en it comes to the current real est
ate market. Therefore if a property
 is overpriced, it simply won_t sel
l. As a homeowner you may well feel
 that a prospective buyer can alway
s make you an offer but in many cas
es buyers will simply walk away. It
 is said that a reasonably priced p
roperty will attract reasonable off
ers but an excessively over priced
property will attract no offers.

If a property is over priced and do
esn_t sell it will sit on the marke
t and will quickly become stale. Bu
yers will recognize the property as
 having been on the market for some
 time and assume that there must be
 something wrong with it; the prope
rty will have gained the reputation
 of being a lemon. If you overpric
e the house to test the market and
then reduce the price later, it sig
nals to buyers that the property wa
s and may still be overpriced. Home
s that are listed through real esta
te agents are particularly vulnerab
le as many agents give homeowners i
nflated valuations on their propert
y to try and secure the listing. Th
e owner is later conditioned by the
 agent to accept a lower offer that
 is often less than the true value
of the property.

Factors affecting the price of your
property
The amount of time that you have to
 sell your home will affect its sal
e price. Any property will sell if
the price is low enough. If the re
al estate market is slow and you ne
ed to sell quickly you may have to
accept a lower price to sell you pr
operty. By offering a property for
sale at a lower price the pool of p
otential buyers is expanded as the
property becomes attractive to real
 estate investors who either want t
o rent the property to tenants or r
enovate and sell at a profit. If yo
u are not in a hurry to sell your p
roperty you can concentrate on appe
aling to homeowners rather than inv
estors. Homeowners are less likely
to be concerned about rental yield
and profit margins and will pay mor
e for a home that they fall in love with

Some factors other than time that a
ffect the price of a property are:

Location: You can_t get away from t
his one; the cliché location, locat
ion, location is well known because
 it is true. If your property is lo
cated in a desirable area that is i
n demand, you will be able to get a
 higher price than you can for the
same house in a less desirable area.

Condition: A house that has been we
ll maintained and can be moved into
 without the new owners having to u
ndertake any major renovations will
 always sell for more than one that
 has been neglected and needs work.

Desirable amenities: If your house
has popular amenities such as parks
, schools and shops close by, it wi
ll sell for a higher price.
FSBO and property prices

As a FSBO homeowner you are in a fa
ntastic position in that you can un
der cut your competition (propertie
s listed with real estate agents) a
nd still keep more of the equity in
 your pocket as you have no real es
tate agent_s fees to pay. However a
 significant number of FSBO owners
erode their competitive advantage b
y asking the same or more than prop
erties listed through an agent.
Opinion is divided as to whether bu
yers would rather buy direct from t
he owner or through an agent. Some
people feel that buyers prefer to n
egotiate through an agent, as they
can be more honest in their feedbac
k, therefore if these buyers are to
 be enticed to consider FSBO proper
ties they need a reduced price to a
ttract them. Others feel that buyer
s would rather deal direct with own
er rather than have to put up with
the deceit and games played by some
 agents. Having dealt with many age
nts and FSBO owners I would rather
deal direct any day.

Whether the prospective buyer prefe
rs to deal direct or would rather b
e negotiating through an agent one
thing is for certain. The buyer kno
ws that the homeowner is saving a c
onsiderable amount through not havi
ng to pay commission and will expec
t the homeowner to share some of th
is saving with them.

Any sensible FSBO vendor will share
 the saved commission with the buye
r by accepting a slightly lower pri
ce. The homeowner is still ahead in
 terms of the equity they have in t
heir pocket and can move on and get
 on with their life in their new ho
me. It is important to focus on sel
ling your home not how much you can
 save.
How to determine the price of your p
roperty

In order to determine the price of
your property it is necessary to co
mpare your property to other homes
that have sold in your neighbourhoo
d. There are three ways that this c
an be done:

1. Online valuation service
These services compile reports base
d on historic sales data for a part
icular suburb or street. They are a
  useful overview and provide inform
ation quickly and easily but provid
e fairly high level information e.g
. you may be able to find out the a
verage house price in a street but
may not know how many bedrooms the
average house has.

2. A professional valuer
A professional valuation is the mos
t accurate way to find out how much
 your property is worth. A valuatio
n from a professional valuer is not
 the same as a valuation that you m
ight get from a real estate agent.
A professional valuer has no financ
ial interest in your property and i
s legally responsible for their val
uation. Banks will require a valuat
ion from a professional valuer in o
rder to issue a mortgage. Banks wil
l not accept a valuation from a rea
l estate agent, as they know that t
hese are not reliable.
In order to value your home the val
uer will visit the property to make
  measurements and assess the condit
ion. They will then consider how yo
ur property compares to other prope
rties that have sold in the local a
rea.

3. Comparative market analysis
It is possible to conduct your own
market analysis by comparing your h
ome to others that have sold in the
 area. The key here is to compare t
o the selling price of other proper
ties and not the asking price.
Find 4-5 houses similar to yours th
at sold in your area over the last
6 months. Ask agents or owners or u
se property records to find out wha
t the properties listed and sold fo
r. Keep an eye on newspaper propert
y pages for examples of recent sale
s.
As no two homes are exactly the sam
e it will be necessary to make adju
stments for differences between you
r home and those in the comparison
e.g. if the home in the comparison
has a renovated bathroom and your p
roperty does not you will need to r
educe the comparison price.

Setting the asking price for your pr
operty

It is difficult trying to subjectiv
ely value your home because of the
emotional attachment that you have.
 This can lead you to over emphasis
e the property_s good points and to
 overlook any shortcomings. In orde
r to get the most accurate valuatio
n we would recommend investing in a
 professional valuation.

When setting the asking price it is
 important to remember that the onl
y thing that is relevant is how muc
h a buyer is prepared to pay for yo
ur home today. It does not matter h
ow much you paid for your home five
 years ago, nor does it matter how
much your new home is costing or ho
w much you still owe on your mortga
ge. It is only your property_s valu
e as determined by the current real
 estate market that is relevant.

You may however wish to include a s
mall buffer to allow for some negot
iating room. 5% more on the asking
price will give enough room to nego
tiate but will not overprice the pr
operty so much that buyers are scar
ed away.

How to maximise your equity

In order to maximise the amount of
money that you end up with in your
pocket we recommend using a profess
ional valuer to determine the prope
rty value.

Once you have decided how much to s
ell your property for listing with
a good FSBO website (also known as
private sale) means you avoid payin
g commission to a real estate agent