Selling Probate Real Estate? Realistic Pricing is Everything!
Because of the current climate in the real estate market, the most important factor in preparing to sell an Estate property is a realistic and competitive pricing strategy. While every seller clearly wants to get as much as they can when selling probate property, it’s critical to remember that a property is only worth what a potential buyer is willing to pay for it. Much too often, heirs set an asking price based on what the property used to be worth or the price they would like to get rather than what a prospective buyer would be willing to pay. Mistakenly setting an asking price too high leads to a property sitting unsold on the market and, ironically, even deeper price cuts down the line! The following tips are critical to understand for anyone involved in selling probate property and how to price your property.
Start With A Competitive Asking Price
Years of studies on selling probate property have proven that starting with competitive asking prices leads to HIGHER sales prices and SHORTER sales periods!
It can be tempting for sellers of real estate to list a property with an unrealistically high asking price. Heirs and estate representatives often forget that simply asking for a certain amount hardly guarantees they will ever get that amount, no matter how long they wait. In today’s real estate market, buyers have a sea of options and will not even look at properties priced higher than other homes in the region. As you can see in the chart to the right, pricing property even 10% over current market value means only 2% of potential buyers will even look at the property. Even at just 5% above market value, 70% of potential buyers will refuse even considering it!
Choose An Experienced Realtor
Choose a realtor experienced in effectively selling property in YOUR area.
When selecting a real estate agent/company, look for one with expertise specifically in your area. This individual will have the best idea of what your house is worth at that given time. Interview two or three local real estate professionals to determine who is best suited to market the property. Selecting an agent who shares your desire for a fast, efficient sales period gives you the greatest likelihood of a sale at a competitive, fair price and reasonable timeframe. Resist the temptation to list a property with the real estate agent who simply suggests they will secure you the highest price for your property. Across the nation, the most successful real estate agents and home sellers understand the importance of listing a property at a competitive price.
List Your Home To Sell Early
Be aggressive early! Statistically, the longer a house is on the market, the less you’ll eventually receive for it.
Your property will get the most attention from buyers during its first month of being exposed to the market. It has been shown that you have the greatest likelihood of receiving the highest price during the first month. As you see in the figure to the right, the actual sales price gradually begins to drop after the first month. This is because buyers increase their scrutiny of price and condition when a property has not sold promptly, assuming that it’s either overpriced or has a problem. If and when the real estate agent suggests a price reduction, the seller must act quickly to let the market know that they are a serious. As time goes on, the seller
may be forced to continually lower the price to attract buyers if they don’t begin with a competitive asking price, eventually even reducing the price below the asking price of competing properties.
Overpriced properties miss out on the probability of a sale during the critical, early period on the market. A buyer’s first impression of a property is critical and directly related to how the price compares to other properties for sale. If the buyer doesn’t feel that a property is well priced in comparison with other available properties, this will negatively impact an otherwise good first impression and the property will never sell.
Be Careful With Major Home Improvements
Home upgrades: More cost than value!
Money spent on major improvements is rarely, if ever, made back in increased sale price! This is a common misconception among people outside the real estate world. The latest data shows the money-losing nature of most home improvements is getting worse because of the poor housing market, not better. In a 2009 survey, the average “home upgrade” cost 36% more than was made when the home was sold. For example, if the average seller spent $10,000 out of pocket on improvements before putting the house on the market, they only made $6,360 more when the house sold! That’s a loss of $3,640! Talk to your sales agent about what minimal work they would suggest be completed to make the property the most marketable.
If the home is in need of small repairs or general cleaning, complete that work before putting the home on the market. Repairs such as painting and minor maintenance will usually shorten time to sale and will help secure a higher sales price.
Be Ready To Negotiate All Offers
Don’t be discouraged! There are still buyers out there looking for a fair price.
During the time the house is on the market, entertain any offers that might come in. Even though an offer seems low, remember that all offers are subject to negotiation. Although it is tempting to hold out for the highest possible offer, in a slow market any offer that is close to your target price is worth serious consideration. You can’t merely “wait it out.” Prices will not likely be back to 2005 levels fordecades… if ever!