By Terri Seignious, Guest Contributor
Market value is a term Realtors and appraisers use a lot but like most professions, we sometimes forget that not everyone communicates in the same jargon we do every day. This term is sometimes confusing when we meet with sellers to discuss the ideal price for their property to get it sold in a reasonable amount of time.
Market value is what a ready, willing, and able buyer who is not under duress will pay for a property. Sellers and their agents simply must do their homework in regards to how they position their property in regards to the market conditions. Most buyers these days are very well educated and have access to tremendous amounts of information about properties thanks to the world-wide-web as well as so many documents and maps being online for easy access.
In my opinion the worst thing a seller can do is overprice their property, have it sit on the market, get stale and create a negative history in the multiple listing (MLS) database. What most sellers do not realize is that the history created in the multiple listing never goes away. Buyers and their agents can easily search how long a property has been listed, exactly what and when price reductions took place as well as how many times it has been listed with various agencies. A long “unsold” history can have a big negative impact on the seller’s ability to sell at all.
Oftentimes, this leads to the buyer’s first question which is usually, “What’s wrong with it?”
If what is wrong with it is that it has been consistently overpriced then chances are when it does sell it may have taken more of a price beating than it should have had it been evaluated properly and the seller had been reasonable in the beginning.
Market value is not what a seller wants for a property. Market value is also not what they want or need to do with the proceeds. A hard discussion to have is to get some sellers to understand that for them, emotion is a large part of process, but the buyers are for the most part very unemotional. It really is a business decision and price must have some strong basis of support.
If you live in a very homogeneous area this may not be very difficult. The harder properties to price are the unique homes, or homes on unique parcels of land. It is incumbent upon the Realtor helping the homeowner pull together as much information as possible about any “sold” like kind properties as well as any suitable “active” like kind properties. This is what is referred to as comparatives or “comps ” in the area. The sold properties made it through the process and are closed. The actives are the current competition. Those properties will act, more than any other factor, as the basis for setting the “market value ” of a property.
Note: As Realtors in the Charleston real estate market, it is our job to act on behalf of our clients, and having frank and honest discussions with them on how to set the “market value ” for their home is part of serving them well. Not only can pricing a property inappropriately do long term damage to the credibility of their listing, but having a listing sit overpriced and languishing on the market also can damage the credibility of their agent.
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