Maryland Home Improvement PSI Practice Exam

When advising a prospective seller on setting a listing price, what should a salesperson suggest?

1. Listing the property at the price the owner believes it is worth.

2. Listing the property at least 30% above the current mortgage.

3. A competitive market analysis to determine the property's value.

4. Setting the price at the value of the most recent sale in the neighborhood.

The correct answer is: A competitive market analysis to determine the property's value.

A competitive market analysis is essential when advising a prospective seller on setting a listing price. This approach involves evaluating recent sales of comparable properties in the same area, considering factors such as location, size, condition, and features. By conducting a thorough market analysis, the salesperson can provide the seller with an objective and data-driven estimate of the property's current market value. This helps ensure that the property is priced competitively, which can attract potential buyers and lead to a successful sale. Setting the listing price based solely on the owner's belief or emotional attachment does not take into account the actual market conditions and could lead to overpricing, resulting in a longer time on the market. Similarly, listing the property significantly above the market value, such as 30% over the mortgage amount, fails to attract buyers and can negatively affect the property's sales potential. Lastly, relying only on the value of the most recent sale in the neighborhood may not consider the unique aspects or changes in the property or market since that sale occurred. Thus, a competitive market analysis is the most effective method for determining a property’s value accurately.