Home prices can change very rapidly and as market prices fall, sellers need to determine the current value and decide how much to reduce the price to sell home properties. There are many different ways for people to try and establish the market value of their homes. The tax assessed values that are used by local governments to assess property tax are one measure of a home’s value. The tax assessments are not always very accurate because some counties cap how much the values can rise or fall each year.
Certain cities have seen spectacular market price drops that have yet to be reflected in tax assessed values while other areas saw price rises during the past decade that were never truly reflected in the tax values. Recent sales which can be found on realtor listings, real estate websites and in public records show what the actual prices homes have sold for recently and sellers can compare their own homes with recent sales and estimate a value.
Due to the high number of foreclosures and short sales, the prices homes have sold for do not necessarily reflect the value accurately so recent sales based on tax assessed values are not an entirely reliable resource. Realtors deal with home sale transactions on a regular basis so many people speak to realtors and ask them for an estimated value. Most realtors will not want to seriously discuss such matters without gaining a commitment that the seller plans to use their services but they may at least give a ball park for comparable properties in order to help the seller determine if the property can be sold for a price that meets their needs.
Factors Influencing Market Value
Having established an idea of a property’s value, sellers need to consider other factors that will help them determine how much to reduce the price when selling a home. The Federal government offered an $8,000 tax credit to first time home buyers in 2009 and part of 2010 but since it expired at the end of May, existing home sales dropped 27 percent in July and fell to the lowest levels seen since 1995.
Some buyers may want to negotiate prices down since the tax credit has expired. In some areas sellers may have to compete with developers or real estate investors quickly trying to sell numerous homes. It will be much harder to sell a house at regular market value if a financially distressed developer is selling four or five identical houses nearby for a fraction of the true value. Local unemployment levels as well as any changes to school districts are other issues that can negatively impact the ability of a home owner to sell a house. These factors must be taken into account when considering how much to reduce the price in order to sell.
Set a Price
Having taken into account the market values and other mitigating factors, a seller needs to determine how much to reduce the price. Calculate the minimum amount the home can be sold for by adding up the balances of any liens on the home, realtor fees, attorney fees, taxes and any other miscellaneous expenses. If you want to sell quickly then set a price that is slightly lower than the market value but remember that most buyers view 2010 as a buyers market and will offer less than the posted price no matter how low that might be. Reduce the price to a competitive level, dropping it as much as you can while not leaving yourself with out of pocket expenses that you cannot afford to cover. Now is not a time to sell a home for huge profit so if you can cover your expenses and walk away with enough money to go towards a new purchase, then you are doing well.
When you decide how much to reduce price to sell home properties, take into account the fact that while the sales price will probably be less than you could have sold it for a few years ago, any new home you buy will likely be priced lower as well. There is not a magic percentage number to reduce the price and sell a home. The only formula that sellers need use for calculating price drops is as follows: Market Value - My costs = price range. Once you have set the price range then decide if you want to drop into it ten percent, twenty percent or more but remember if you drop the price too low and don’t sell in a short period of time then it is very hard to increase the price again to cover those extra months of mortgage and tax payments.
National Association of Realtors: https://www.realtor.org/press_room/news_releases/2010/08/ehs_fall?utm_source=feedburner&utm_medium=feed&utm_campaign=feed%253a+realtororgresearchheadlines+%2528realtor.org+research+headlines%2529