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Price vs time: Measuring your motivation

By Trulia | Published: Oct 14, 2009 | 8 Comments

Pick a price, any price for your home. Now wait. Eventually, someday, someone will probably be willing to pay you that price. The question is - Do you have the time or the desire to wait for that to happen or would you rather sell your home now for a reduced amount of money? Welcome to the Price VS Time dilemma that faces all homeowners.

The Price VS Time dilemma is the challenge of determining which is more important to you as a homeowner - selling quickly or selling for top dollar. Of course, it's easy to bang the kitchen table with both fists and say I want both, but that's unrealistic. In the real world every homeowner falls into one of two categories: the necessary seller or the optional seller. Let's define these two vastly different types of sellers:

The Necessary Seller: Necessary sellers are homeowners who must sell their home and it's not something they can avoid or put off. Perhaps they have a job transfer or job loss, a pending divorce, health condition, or a financial crisis that is causing them to sell. Regardless of the reason, they need to sell, and the faster the better.

The Optional Seller: Optional sellers are homeowners who have made the choice to sell. They aren't forced to move, they simply would like to make a housing change. Perhaps they want to upgrade to a newer home, a larger property, or just as likely, maybe they are selling to travel or move closer to friends and family. The bottom line is it will be inconvenient if they don't sell, but the world won't end.

So which kind of seller are you - a necessary seller or an optional seller? The answer to this question is key to determining how you resolve the Price VS Time dilemma, but be careful as it's not as easy it might sound. For instance there are tens of thousands of necessary sellers across the nation who desperately need to sell their homes quickly, yet they act as if they are optional sellers. These sellers list their homes for inflated prices and then are shocked, frustrated, or even angry that their homes fail to sell within their pre-set timeframe. Another wrinkle facing both optional and necessary sellers today is the issue of rapidly declining prices in many areas of the country. While in a typical real estate market an optional seller might hold out for top dollar, this strategy can easily backfire in today's market as their home may be worth significantly less the longer they hold out for a higher price. In addition while many optional sellers may not be forced to sell, they may want to sell quickly because of other motivating factors. If this is the case they will need to adjust their pricing strategy accordingly.

If you are having a challenge determining just where you fall on the motivation scale ask yourself this follow up question. If I listed my home for 90 days and it did not sell, what would be my next step - adjust the price or give it a little more time? If your answer is to adjust the price, this would seem to indicate that selling quickly is more important for you. On the other hand if you feel more inclined to give it a little more time, top dollar is more than likely your primary motivator.

To unravel the Price VS Time mystery further sit down with a local agent and give them an honest assessment of the reasons why you are selling. By reviewing what homes similar to yours have sold for in recent months and the time frame it took those sellers to sell, it should help you to set a pricing strategy that meets all of your needs.

Comments

By The Cascade Team Real Estate,  Tue Mar 23 2010, 17:14
Very well written!
By Fran Rokicki,  Mon Sep 13 2010, 15:55
There is, actually, a formula used to estimate your average time on the market. It includes sales and listings from the mls, in your area. I offer this information to my clients, who may be "on the fence." With the rates at an all time lowe, this is a good time to sell to the motivated buyers.
By Odrisso1,  Thu Nov 25 2010, 11:48
motivation
By Odrisso1,  Sat Nov 27 2010, 10:33
Keep your business up dear,,
Business Building Strategies
By Matie,  Tue Jun 26 2012, 05:16
Surely positive information

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By Brian Smith,  Mon Jun 17 2013, 06:23
Thanks for the good advice! I think everything depends more on a time factor. If you need to sell your house urgently then you should sacrifice by amount of money you want to get and negotiate the price. But if you have time then you can afford to set as high price as you wish and wait for a reaction. Who knows, maybe you will find a consumer for whom this price will be okay. But I think that to save your time it’s better to hire an advisor and try to set a reasonable price. When your offer is really good then it may attract even low income people who use http://northenloans.ca/payday-advance.html to cover their expenses and it means that you'll be able to sell your house faster.
By pmarketsale,  Fri Jun 21 2013, 19:43
This article clearly lays out the time vs price dilemma. Unfortunately, with many real estate agents, they are getting the worst of it both ways- Slow sales and 6% haircut on the sales price. When my brother faced this dilemma, he researched many investment groups out there ready to make quick offers that are made more attactive by no real estate commission. He highly recommended tristatehouse.com
By Pr,  Wed Sep 24 2014, 01:56
A price-versus-time equation flips a bit; especially when comes to selling a house! Yes, it is one’s real-time necessity that will decide upon the real purpose of selling the house. A house sold in a hurry (forced decision, may be) will have to grant some restrictions for benefits gained; whereas, a planned housing sale will be more likely much favorable in terms of sellers, with them waiting for the right time, flinging up with wise money.

Else, price and time would walk side by side, emerging into good profit when being picked up on correct time (of course including all depreciations incurred by you over the time, since you last purchased it; best deal, yeah)!

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