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Selling in a Buyer's Market
March 13, 2010 - Dylan Renz
When we had a seller’s market (before the “bubble” burst) the strategy was always to take the current market value of a property and add 5-10% to that amount. When there were more buyers than homes available and prices were on the rise this strategy worked well. It gave sellers room to negotiate and homes often sold at or above market value. I am always surprised at how many sellers are still using this strategy and even more surprised at their amazement when a year later the property is still on the market.
We are no longer in a seller’s market and selling in a buyer's market reqires a new strategy. The best strategy for selling in today's market is to take the current market value of the property and subtract 5-10% from that amount to determine the asking price. I know, I know. Asking less than the property is worth seems crazy, but let me tell you what I have seen over and over again. When the asking price of a property is less than the current value of the property it stands out from all of the competition and serious buyers will nearly fall over each other to purchase the property. Many people are surprised to hear that multiple offers on a well priced home in this market are the rule, not the exception. More often than not sellers that use this strategy sell their homes quickly and for current market value, which is more than they were asking!
Homes that are priced at or above the current market value have to wait for these well priced properties to be “bought up” before they even have a chance at those buyers. Look at it from a buyer’s perspective. Let’s say there are two homes in the same area, same size, same upgrades, etc. You determine that the current market value of both homes is $250,000. One is listed at $265,000 (just over market value) and the other is listed at $235,000 (just under the market value). Which one are you going to see and get excited about first? Both homes will likely sell for around $250,000, but one home will sell now and the other might take years.
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