Q: Help! We urgently need funds, thus, we need to sell our property asap! We’ve read that to attract buyers, the strategy is to list slightly below market value. Can you guide us how to compute a fair list price without pricing it too low?
Prof. Eden Dayrit, REC REA REB : I commend your realistic approach in solving a pressing need. While it is true that in the right market, it is possible that properties can be sold above asking prices or fair market value, the same cannot be said about properties sold in a rush.When sellers are in a bind to raise funds asap, the strategy of pricing slightly below market value you mentioned is one effective way to sell fast.
Here are a few real estate pricing reduction tips without pricing too low:
1. Set MAXIMUM LIST PRICE at computed fair market value (FMV). This means that we will set asking price close to the average prices in the market.
Doing so, our listing will not be viewed as expensive (if exceeds FMV) and will be included in compilations for property showings (no opportunities lost.)
Listings priced above FMV tends to be ignored by buyers, simply because, considering all property features equal, it only makes sense to prioritize checking properties that are at the lower to average end of the pricing range. And only considering those above FMV if the lower priced ones doesn’t meet their requirement.PS. I have a separate module on how to determine FMV, PM if interested.
2. Determine MINIMUM ACCEPTABLE SELLING PRICE.
Those in a real hurry to sell needs to identify the listing among the compiled comparables that has the least price per square meter value.
Then, price your property using the same value (or the next lowest, or the next one without exceeding FMV, depending on your comfort level.)
Logic dictates that, considering all features equal, if you’re priced cheapest in the market, you have a significantly higher chance to receive more offers and close faster than listings priced slightly above yours, even if they did not exceed FMV.
3. Consider listing BARE without furnishings.
It is sometimes reasonable to list bare, specially if furnishings/appliances are old/outdated.We’ve handled listings that were interiored by well-known designers.
Some still present well during showings. But there are also those that did not age well… at all! (Imagine outrageous colored accent walls, a variety of textures within the same space, unusual/sometimes unidentifiable pieces.)
Understand that you and most buyers most likely differ in taste. Pushing a “unique” (I try to be PC too!) furnished listing is akin to targeting a buyer that shares your design perspective, thus effectively limiting your prospects.
Listing bare not only shaves the list price at unit value only, but also presents a blank canvas for the buyer to create a space he likes, than him trying unenthusiastically to fit in the existing one.
4. Consider listing as VACANT LOT ONLY, even when it has a structure on it.
I don’t usually recommend this strategy if the existing structure still has not run its economic life to the hilt. When is this applicable then?
If a structure is old and it will be more expensive to renovate than to build new, a prospect buyer will have the exact same mindset. Thus, might only offer lot value.
If a structure is outdated and isn’t usable anymore. Or if existing structure isn’t its highest and best use, consider pricing as lot, plus the value of anything salvageable, if any.
Have anything to add? Or maybe more questions? Comment below.#ProfEdenDayrit #RealEstateBroker #RealEstateAppraiser #RealEstateConsultant #Listings #FairMarketValue #RushSale #BuildNew #PricedtoSell