Real estate Internet Marketing. Testing the market price is a costly mistake.

Let me paint the picture of how a typical market analysis takes place.

A seller considering placing their property on the market will typically call two to three local agents to perform a market analysis.  The real estate community likes to call them a Current Market Analysis (CMA).  All three agents will come over and see the property and all three agents will usually come back with differing figures.  The particular agent that the sellers happen to like, based on personality, experience and energy (great traits in a salesperson) does not have the highest estimate of value.  In fact, the sellers disagree with all three current market analysis and on top of that, the sellers want to test the market!

Let’s look at this even further.  The next step will usually be that the sellers express their disappointment to their favorite candidate because they feel all the CMA’s are too low in price.  In fact, this agent was the lowest in estimate of value but the sellers want to go with this agent because they like this agent.  What happens next is that agent will almost always agree to take the overpriced listing at the seller’s desired price and try it out “for awhile.”  He or she might even agree to follow the seller’s desire and test the market even further by going up even higher in the original pricing.

Notice that the seller set the price by pushing it up higher than all the estimates of value and the realtor agreed and let the seller do so. 

So what’s the harm in this?  Plenty!

Properties that are priced accurately sell quicker and for a greater amount of the asking price.

If the property stays on the market for any length of time it will cost the seller real money.

Every day you own and carry your property, it costs you money that you will never get back.  I have never seen a transaction in which the sale price was added to the carrying costs that were accumulated while the property was for sale and then added together for a new price that was adjusted higher at the closing.

Daily expenses such as taxes, insurance, mortgage principle and interest are adding up.

As an example, let’s say your home is worth $300,000 and you place this property on the market for $375,000 to “test the market.”  After 8 months and 3 listing price reductions later and it finally sells for the $300,000 that it was always worth.

 

 

 

The figures breakdown like this;

$300,000 Sales price

-          9,600 minus 8 mortgage payments (consisting of almost all interest)

-          4,666 minus 8 months of real estate taxes ($7000/year)

-             400 minus 8 months of insurance ($600/year)

$285,334 Net amount after expenses

 

$300,000. Sale price

  285,334 net amount after 8 months expenses

_______

$14,666.

 

It costs almost $15,000 to test the market.

 

 

Now let’s look at an efficient sale.

You price the property at $304,900 and accept the same $300,000 as above only this time it sells in 1 month because it was priced accurately.

 

$300,000 Sale Price

-          1,200 minus 1 mortgage payment

-             583 minus 1 months real estate taxes

           50 minus 1 month’s insurance

$298,167

 

It costs $1,833 to sell in one month.

 

 

Compare the two different scenarios with the only difference bring that of time. Both accepted the same $300,000.

$285,334. Net after marketing for 8 months or

$298,167. Net in one just month

$12,833.  INCREASE IN MONEY TO THE SELLER BY SELLING THE 

                PROPERTY MORE EFFIECENTLY AND IN LESS TIME

 

This is a savings of almost thirteen thousand dollars, simply by not testing the market and selling the property more efficiently. Seven months time and $13,000 more in your pocket by not playing the all too tempting “test the market” game!

In my new book REAL ESTATE 3.0 HOW TO USE THE INTERNET TO SELL YOUR REAL ESTATE AND SAVE THOUSANDS OF DOLLARS IN COMMISSIONS.  I explain many of the changes and conflicts of interests that take place and have a negative impact on the sellers of real estate and how so many Realtors are actually counterproductive and harmful to the Seller’s cause.

I have more than 25 years experience in the Real Estate Industry as a Broker, Builder, Developer and Investor. I have bought and sold many, many properties directly without the use of MLS or listing Realtors. In fact I have sold entire communities with very little involvement from the Realtor community and I can show you how to use the Internet to sell your property without wasting your money on a listing real estate agent.

Sellers can now replace the negative outdated services of listing Realtors with the Internet. I will show you how to work directly with buyers and cooperate with the type of Realtors that are entirely worthwhile, the buyer’s agents. My 12 PRINCIPLES FOR SUCCESSFUL ONLINE REAL ESTATE SELLING is available for free online at http://www.AskJamesJoseph.com so be sure to get your free copy.

My mission is to show people how to easily use the Internet to sell their own property all the while saving tons of money by performing some very simple steps which will get your real estate seen and sold.

 

 

 

 

 

 

Real Estate Internet Marketing principle #1 Be Brave and Set the Price – The Seller Always Has

Don’t be afraid! Most Sellers know exactly what their property is worth, especially the sellers of owner-occupied properties. Long before the Internet, most sellers were aware of what’s going on around the area and what’s been sold and for how much. Sellers usually know the area property history better than most realtors.
Now with the Internet, it is so easy to pull up your area and see where your property fits into the local marketplace. Sites such as www.googlebase.com, www.trulia.com and www.Realtor.com have everything most people need to use for comparable properties.
Be careful not to use automatic price values that are available on many of the Internet sites. Sites such Zillow publish what they refer to as a Zestimate of value but these values can range by a ridiculous amount of money, often ($200,000.) several hundred thousand dollars and more.
If you actually are unsure of where you property fits into the market, simply review the information on the Internet about what is for sale and what has recently sold in your particular area for similar properties. Where you fit into the local market is actually the key to the pricing process. Separate the other properties into two categories: 1) the properties that are just a little better than yours; and 2) the properties that are not quite as good as yours. Your property is in between these two groups and so should your price.
Yes there are exceptions to this and every rule but almost always a quick look at similar properties that are for sale and similar ones that have sold recently and it will be fairly easy to figure out the pricing.