Anthony Crecco

When you decide to sell your

home, setting your asking

price is one of the most

important decisions you will ever

make. Depending on how a buyer

finds your home, price is often the first

thing he or she sees, and many homes

are discarded by prospective buyers as

not being in the appropriate price

range before these homes are given a

chance to be shown.

Your asking price is often your

home’s “first impression”, and if you

want to realize the most money you

can from your home’s sale, it is

imperative that you make a good first

impression.

Because this is not as easy as it

sounds, your pricing strategy should

not be taken lightly. Pricing too high

can be as costly to a home seller as

pricing too low. Taking a look at what

homes in your neighborhood have

sold for is only a small part of the

process, and this on it’s own is not

nearly enough to help you make the

best decision.

This report will help you understand

some important factors about

pricing strategy to help you not only

sell your home, but sell it for the price

you want.

Pricing Strategy

Starts with

Good Information

Before you can begin to know

what your home is worth, you

should do some research, bearing

in mind the following:

An analysis of what homes

have recently sold for in your

neighborhood is NOT enough

to help you properly price your

home.

A quick scan up and down the street

at the prices of homes that have

recently sold will give you a starting

point. However, this is not nearly

enough for you to base your entire

pricing strategy on. It is important

for you to understand how buyers

look for a home.

Think about how you conducted

your house hunting search to find the

home you are now thinking of selling.

You most likely did not confine

your search to a single neighborhood,

but perhaps different neighborhoods or

towns in order to find a home that best

matched your needs and desires.

The prospective buyers who will be

viewing your home, will conduct their

searches in a similar manner. That

means they will be comparing your

home to, for example, brand new

development homes, century homes,

10-20 year old homes, etc. They will

also consider locations such as homes

in established neighborhoods, the

middle of town, the suburbs or country

properties. Each home will have a

different look and feel and it’s quite

possible that a prospective buyer might

consider all of these variables in the

search for a home.

You can see, when you’re selling

your home, you’re not just competing

with the home around the corner, but

also with all homes in other areas

which have the same basic characteristics:

i.e. number of rooms, overall

living space, etc.

How Your Asking Price

Affects Your Selling Price

There are 4 common strategies that most

sellers use to price their homes. It is

unwise to assume that a higher asking

price will net you a higher selling price. In

fact, often this equation works in reverse if

you're not paying attention to what the market

is telling you. Bear this research in mind when

you set your asking price.

1. Clearly Overpriced:

Every seller wants to realize the most

amount of money 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 overinflate the

value of your home. This is done far too

often, with many homes that are priced 10-

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 labeled 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.

2. Somewhat Overpriced:

About 3/4 of the homes on the market are

5-10% overpriced. These homes will also sit

on the market longer than you want. 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 (afterall, there's 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 at Market Value

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

priced 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

interest in mind.

For many Americans, "coming up" with a down-payment for their first home purchase can be a major roadblock -- and quite often the reason for renting, rather than owning, a home.

A "down-payment" is the difference between the home's purchase price and its mortgage amount. This percentage of the sale price must be paid up-front and can vary by lender, location, and loan program. A higher down-payment generally translates into lower loan interest rate requirements.

Typically, a down-payment comes from personal cash savings, but it can also be a gift that is not to be repaid, or a borrowed amount secured by assets.

While conventional loan down-payments may be close to 20% of the sale price, government loans typically have lower down-payment requirements. This allows potential homebuyers who normally cannot meet down-payment requirements an opportunity to qualify for a mortgage. Keep in mind that down-payments that are less than 20% of the sale price typically require mortgage insurance payments.

Down-Payment Assistance Programs

Fortunately, there are programs and organizations that can help you with your down-payment requirements:

Government Loan Programs - Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) may offer assistance in paying your up-front cash requirements. These programs can significantly reduce your down-payment requirements. You may also want to contact your local Department of Housing and Urban Development (HUD) Community Builders to find out what local down-payment assistance programs are available.

State Housing Authorities - State agencies may offer down-payment assistance programs in your state.

Private Mortgage Insurance - Private insurance companies that offer you the opportunity to finance some of your down-payment requirements. This allows lenders to accept lower down-payments than they would normally allow.
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Great news from Washington!

The Senate on Wednesday approved a plan to give homebuyers an extra three months to finish qualifying for federal tax incentives that boosted home sales this spring.

The move by Senate Majority Leader Harry Reid would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.

The proposal, approved by a 60-37 vote, would only allow people who already have signed contracts to finish at the later date. About 180,000 homebuyers who already signed purchase agreements would otherwise miss the deadline.

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.72 percent with an average 0.7 point for the week ending June 10, 2010, down from last week when it averaged 4.79 percent. Last year at this time, the 30-year FRM averaged 5.59 percent.

The 15-year FRM this week averaged 4.17 percent with an average 0.7 point, down from last week when it averaged 4.20 percent. A year ago at this time, the 15-year FRM averaged 5.06 percent. The 15-year FRM has not been lower since Freddie Mac started tracking the 15-year FRM in August of 1991 and sets another record low for the fourth straight week.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.92 percent this week, with an average 0.7 point, down from last week when it averaged 3.94 percent. A year ago, the 5-year ARM averaged 5.17 percent.

The 1-year Treasury-indexed ARM averaged 3.91 percent this week with an average 0.6 point, down from last week when it averaged 3.95 percent. At this time last year, the 1-year ARM averaged 5.04 percent. The 1-year ARM has not been lower since the week ending May 27, 2004 when it averaged 3.87 percent.

"Following a relatively weak employment report, bond yields fell this week and mortgage rates followed," said Frank Nothaft, Freddie Mac vice president and chief economist. "Private payrolls rose by 41,000 jobs in May, less than a quarter of the market forecast consensus of an 180,000 gain. Interest rates on 30-year fixed mortgage hover near the record low set on December 3, 2009 in our survey; the Primary Mortgage Market Survey began in April 1971. Meanwhile, rates on 15-year fixed mortgages set another record low for the fourth week in a row."

"Overall, the economy does show signs of improvement. The Federal Reserve reported in its June 9th regional economic review that the economy strengthened in all 12 of its Districts over April and May. It also noted that loan quality was stable or improving in most Districts, but remained an issue for banks with large exposure to real estate."