It’s a seller’s market!
That means that you can ask as much as you want…right?
The negotiated price is not the final sale price.
Once you and the buyer agree on a price, the deal still must survive all the tests that the buyer’s lender will apply. If the price changes, you proabbly lose. That’s why a spot-on asking price is the single most important factor for a successful sale.
Here’s how it breaks down.
Once you and the buyer agree on a deal, the buyer’s lender has to approve of the pricing and terms before it will greenlight the buyer’s mortgage.
The lender doesn’t want to support the purchase of an overpriced home, because the house is collateral for the loan. So the lender will dispatch an appraiser to research the market, examine the house, and provide evidence that the agreed-on price is accurate.
If you’ve asked too much, the appraisal might come in lower than the market norms. You will be forced to take the lower price, because appraisal is the final word on the value of the house. The buyer has to either pay the difference – unlikely – or force the sale price to match the appraised value – likely.
Partly due to the tight market and partly due to their own optimism, homeowners are overestimating the value of their houses, according to ongoing research from Quicken Loans . In May, Quicken’s monthly Home Price Perception Index found that appraisals came in 2.17% lower than homeowner expectations. The index is based on mortgage applications and corresponding appraisals, so it’s an accurate reflection of the gap between expectation and reality.
How can you figure out the right asking price?
- Start with USRealty.com’s Pricing Guide.
- Get a market report from an online source like CoreLogic.
- Talk with local realty agents – just be aware that they use market analysis as a way to win your listing. A listing agent is guaranteed 3 percent of the sale price of your house. You can avoid that commission by listing with USRealty.com.
- Order a full-on appraisal. It will cost you about $300, but it’s indisputable proof of what your house is worth. With an appraisal in hand, your asking price will be reasonable and negotiations should be short.