The 4 Prices - Essential Numbers to Know When Selling Your Home

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It is pretty common knowledge that the listing price for a home doesn’t necessarily equate to the sales price; but did you know that there are actually FOUR prices for a home? Bet ya didn’t. Well, you do now! I’m going to break it down for you. If you’re thinking about selling your home anytime in the future, this information is going to help you tremendously! I promise.

So, what exactly are the “four prices?”

• Appraisal Price/Value
• Market Price/Value
• List Price
• Price to “Sell Now” (a/k/a/ fire sale, get me out of here!)

Sometimes, appraisal value and market value are in line with each other. Other times, they are not. Why is that? And why is it so important to know?

Appraisers are looking at the “on paper” details of a home when they come up with valuations. Meaning, the square footage, location, bedrooms, bathrooms, etc. are what most heavily impact the number they come up with.

Typically, an appraiser will pull comparable data that is no more than six months old, ideally three months. Today’s market doesn’t look the same as it did xi months ago, so the appraised value may actually be higher or lower than what today’s market value is.

We think market value is pretty self explanatory, but let’s just get real basic for a second. In layman’s terms, market value is what a buyer is willing to pay for a property at any given time. As previously mentioned, it may or may not align with the value that an appraiser would put on it.

So you feel good about understanding that your home’s appraised value may be higher or lower than the current market value, but what about list price? Where does that factor in? How do you & your real estate agent determine it?

Let’s say that the current market isn’t as hot as it was 3-6 months ago. It’s cooled a bit now, and prices are lower. That means that the appraised value is going to be higher than market value. However, in order to sell the home, it needs to be priced appropriately for the current market conditions which may mean that it needs to be priced lower.

What might that look like? Well, maybe in your location the market calls for listing at an aggressive price in order to try to encourage multiple offers.

Perhaps it looks like getting just a bit under the competition in order to have an advantage over properties on the market that are in direct competition with your home.

You and your agent should take a look at the homes on the market right now. This will give you a good understanding of what your potential buyer is looking at. Why? Because every buyer who is going to look at your home is looking at the other, similar properties on the marketplace.

You want to be sure that your list price of your home is appropriate for the market conditions, and this is the best way to get a feel for that number. If your property is priced too high and out of line with the current market, your potential buyers will likely skip over it entirely. Ouch! You don’t want that to happen!

Don’t worry, you can NEVER be priced “too low” - your only concern should be about pricing too high! Because if you are lower than the market value, buyers will see that and make sure they are writing offers that come in higher than list, and you potentially have more offers to choose from.

Now, what about that fourth price? Here’s the thing, I’m going to level with you. It’s not fun and it’s not pretty. It’s called the “price to sell now” and this typically is about 3-5% under market value at any given time.

While there isn’t a tried-and-true scientific way to calculate the price to sell now, the 3-5% under current market value range is pretty accurate. It’s important you understand what that price is if you need to sell immediately. Your agent should really be incredibly honest with you about this.

Of course, every housing market is different, so this is not meant to be exhaustive advice. This is the number you would use if you told your real estate agent, “Hey, we HAVE to sell as quickly as possible. Like, 30 days or less, we need to be sold & out of here.”

So that means you need to be really aggressive with the price and get under the market to attract a ready, willing, and able buyer as fast as possible. Some agents might refer to this as a “fire sale” price.

BONUS: The 5th price. This one isn’t talked about as much, because agents are often afraid to have uncomfortable conversations with sellers about it.

The 5th price is the unrealistic, fantasyland price that you want to try for, and the agent says ‘no’, that price won’t work. Why does the agent say no? It’s actually pretty simple.

They know that the market will not support the price you really want to list for. They know that you will end up frustrated because your property isn’t selling, and you’ll fire them because the agent knows they are going to have to come to you and ask you for a price reduction.

It just isn’t pleasant for anyone, so the best agents recognize that it is better for everyone involved if they politely decline to take a listing with an unrealistic price.

It’s nothing personal, honestly, they just know that they’d be set up for failure from the outset and that you’ll be disappointed when they fail to produce the results you want.

We hope this has helped you in understanding the four prices when it’s time to list your home. Always feel free to reach out to the Spaniak Team at any time for a free evaluation of what your home is worth.

To watch a recorded webinar about what to do to update your home before you sell, click here. https://kati.myclickfunnels.com/update-your-home-to-sell

The Spaniak Team - eXp Realty has sold over $325 million in residential real estate in the Chicagoland area. To watch They can be reached at (847) 318-3431, at Info@SpaniakTeam.com, or on the web atwww.SpaniakTeam.com

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