DIGITAL UPDATE


How Sellers Set Their Asking Price F


or you as the buyer to understand how much to offer for a home you're interested in, it is important for you to know how sellers price their homes. Here are four common strategies you'll start to recognize when you begin


to view homes: 1. Clearly Overpriced Every seller wants to realize the most amount of money that they can for their home, and real estate agents know this. If more than one agent is competing for your listing, an easy way to win the battle is to over inflate the value of your home. This is done far too often, with many homes that are priced 10 to 20% over their true market value. This is not in your best interest, because in most cases the market won't be fooled. As a result, your home could languish on the market for months, leaving you with a couple of important drawbacks: Your home is likely to be labelled as a “troubled” house by other agents, leading to a lower than fair market price when an offer is finally made. You have been greatly inconvenienced with having to constantly have your home in “showing” condition … for nothing. These homes often expire off the market, forcing you to go through the listing process all over again.


Home pricing strategies


What Can You Afford?


Once you have determined what it is you want and need, you'll have to find out what you can afford. The first tip is to set a maximum price range instead of just an upper price. It's not always wise to buy the most expensive home you can afford but better to aim lower in anticipation of extra costs or fluctuations in your income.


A REALTOR® or your financial institution can help you determine the amount of the mortgage you can carry by calculating your debt-service ratio. The rule of thumb is that the sum of all your current loan payments (car, personal, credit card, etc.) plus your mortgage should not exceed 40 per cent of your gross income. In addition, mortgage payments and property taxes should not be more than 30 per cent of gross income.


Buying your first home may seem intimidating in the beginning, but with careful planning, a clear idea of what you want and the help of a REALTOR®, home ownership can be become a joyful reality for you and your family.


2. Somewhat Overpriced About ¾ of homes on the market are 5 - 10% overpriced. These homes will also sit on the market longer than they should. There is usually one of two factors at play here: Either you believe in your heart that your home is really worth this much despite what the market has indicated (after all, there is a lot of emotion caught up in this issue) OR You've left some room for negotiating. Either way, this strategy will cost you both in terms of time on the market and ultimate price received. 3. Priced Correctly on the Market Some sellers understand that real estate is part of the capitalistic system of supply and demand and will carefully and realistically price their homes based on a thorough analysis of other homes on the market. These competitively prices homes usually sell within a reasonable time frame and very close to the asking price. 4. Priced Below the Fair Market Value Some sellers are motivated by a quick sale. These homes attract multiple offers and sell fast – usually in a few days – at, or above the asking price. Be cautious that the agent suggesting this method is doing so with YOUR best interests in mind. How I Can Help Relax. You CAN win at the home buying game. Your best first move is to call or email me, Rick Horsland at RE/MAX of NANAIMO 250- 751-1223 or rick@rickhorsland.com I am here to make sure you succeed and avoid the deadly sins when buying a home. After all, my business depends on referrals from happy homeowners who received service beyond their expectations and tell their family friends and co-workers.


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