1. We really believe that REALTY EXECUTIVES is “The difference between ‘For Sale’ and ‘Sold.’”
©REALTY EXECUTIVES International, Inc.

2. Pricing Roles Seller sets Price Buyer determines Value
Lender validates
Value
It is important to understand the different roles that the parties play in pricing your home. You, as the seller, sets the price of your home. However, the buyer determines the value by stating how much he is willing to pay. And then, in most cases, there is a loan involved and the Lender validates the value to be sure that they are not loaning more than the property is worth. My role is to present you with objective facts about what has sold in the marketplace and to help you understand how your home compares to them. It’s your role to set the price at a fair market value.
©REALTY EXECUTIVES International, Inc.

3. Factors That Affect Value
Comparable sales
Inventory of homes available
Available mortgage money
General economy
Favorable terms
There are a number of different factors that affect value. The comparable sales show what have actually sold recently near your home. These are facts and are given the most weight in determining a price. The number of homes that are currently on the market can also affect value. If the demand is high and the supply is low, the price can go up. If the demand is low and the supply is high, the price can go down. It is just basic economics.
If mortgage money is in short supply or priced high, it reduces the number of people who can consider your home which will lengthen the time it is on the market and ultimately affect value.
If the general economy is good, people will fee “good” about buying a home. If there are favorable terms, people will be willing to pay more.
©REALTY EXECUTIVES International, Inc.

4. Terms Can Increase Value
Seller carries a 1st lien below market rate
Seller carries a 2nd lien for buyer to avoid PMI
Temporary buy-down
Seller paid points
Subsidize buyer’s costs
Make specific improvement required by the buyer
Include a decorating allowance.
If the seller was willing to carry a 1st lien below the current market rates, a buyer might be willing to pay more for the home because his payments would be less.
If you are willing to carry a second lien for 10% of the sales price, the buyer could put 10% down and get an 80% loan. This would allow the buyer to avoid Private Mortgage Insurance which would save money needed to close (as much as 1% of the loan) and the renewal on the PMI which is about ¼% per month. Would you be willing to do that?
A seller can contribute a subsidy in cash at time of closing that would give the buyer lower payments in the first two or three years of their loan. Typically, this is more appropriate in lower priced homes.
If the seller is willing to pay points in order for a buyer to get a lower interest rate mortgage, they may be willing to pay more for the home.
If the seller is willing to pay part or all of the buyer’s closing costs, they could get in the home for less “out of pocket” cash. The home would appeal to more buyers and they might pay more for the home than if a seller wasn’t willing to help with their closing costs.
Another option might be for the seller to buy something for the home, like new carpet, and include it in the price of the home. The buyer would feel like the home was worth more to them if they could pick out the carpet of their choice. Or you could just give the buyer a decorating allowance to be spent any way they want. This needs to be approved by the lender.
©REALTY EXECUTIVES International, Inc.

5. Factors That Don’t Affect Value
What you paid for the home
The cost to rebuild it today
Your investment in the improvements
Certain types of improvements.
However, there are some things that just don’t affect value at all. For instance, what you paid for the home is irrelevant to today’s market. Just because you might have overpaid for a home doesn’t mean that the new buyer needs to. The market conditions may have changed.
You may have invested in certain types of improvements for our own personal enjoyment that has little or no value to the buyer. Sometimes, an owner will make improvements with the highest of quality items that are not justified by the price of the home. They just won’t increase the value.
©REALTY EXECUTIVES International, Inc.

6. Obstacles to Proper Pricing
Agents who will accept a listing at any price
Neighbors who mislead the seller as to how much they got for their home
Fear of making a mistake
Loss of perspective because the seller is emotionally involved
Need to realize a certain amount of cash out of the sale.
There are obstacles to proper pricing that need to be avoided if at all possible. There are agents who will accept a listing at any price and then, after you become disappointed that it hasn’t sold, solicit a price reduction. There are neighbors who intentionally mislead other neighbors by letting them think they sold their home for what they were asking for it.
Fear of making the mistake of selling too low will also cause a person to pricing a home too high. They know that if it sells for that price it would be good but they just aren’t certain what the “right” price should be.
We’ve seen sellers who lose the proper prospective because they are emotionally involved and cannot approach the task logically.
No matter how legitimate the need to realize a certain amount from the sale, it will not justify overpricing a home.
©REALTY EXECUTIVES International, Inc.

7. Overpricing Reduces sales associates activity
Reduces marketing response
Loses interested buyers
Attracts the wrong prospects
Eliminates offers
Helps sell the competition
Extends the market time.
Unfortunately, overpricing actually causes some severe outcomes. It reduces sales associates activity because they know it is too high and they don’t want to show it to buyers looking for a different price home. This leads to reduced marketing response; pretty soon, even the buyers in the market know it is overpriced which leads to actually losing buyers who might have bought it but ended up buying something else.
An overpriced home actually attracts the wrong prospects. For instance, a buyer looking in a certain price range expects the home to have certain amenities typical of that price range. When they look at a home that is overpriced, it doesn’t have what they are looking for and therefore, will not consider it. The people who could afford it won’t be looking at it because it is out of their price range. This actually eliminates offers before there is even a chance to negotiate them.
If a home is overpriced, it might be used to make a reasonably priced home look like a good value. This means that your overpriced home is actually helping to sell the competition.
All of these things extend the time needed to sell a home which could lead to another completely different set of problems.
©REALTY EXECUTIVES International, Inc.

8. Appraisal vs. CMA Description Appraisal CMA Estimate of value Yes
Performed by
Appraiser
Agent
Licensed
Considers past sales
Considers current sales No
An appraisal is an estimate of value determined by a licensed appraiser based on comparable sales of similar properties that have sold and closed.
A CMA, comparative market analysis, is an estimate of value determined by a licensed real estate agent based on comparable sales of similar properties that have sold and closed. It also includes similar properties that are currently on the market that a buyer would be considering when looking at the subject property.
©REALTY EXECUTIVES International, Inc.

9. For more information on the selling of your home contact us at:
Realty Executives-Integrity First Realty, Inc.
263 Brick Blvd, Suite 1
Brick, New Jersey 08723
Phone: (732)
We really believe that REALTY EXECUTIVES is “The difference between ‘For Sale’ and ‘Sold.’”
©REALTY EXECUTIVES International, Inc.