I don’t care if you have staged your home to perfection, the landscaping is the envy of the neighbourhood and you live in one of the most desirable areas in town, if you plan on making a quick sale, listing your home at the WRONG inflated price can cause your property to sit on the market for months. In fact, showings will be few and far between.
Pricing is never a simple process and sellers who are inclined to list their home for what THEY think it’s worth are wasting their time and money. Your home is only worth what the market says it’s worth and what buyers want to pay. If everyone could sell their home for what they think it should go for, then would there be such a thing as underwater homes?
So let’s look at some of the most common mistakes sellers make when overpricing their homes. If you want to sell your home quickly, then this is a must read.
Wouldn’t it be nice if we could add just put a price on our homes without doing the necessary research? Unfortunately, this is not the case, especially in today’s competitive market. Without researching past sales in the local market, we have seen sellers base their prices on hearsay or the price of the home down the street. Listing prices are NOT good indicators of what your home may sale for, simply because homes can sell a great deal less than they are listed for. If you list the price based on what your neighbour is selling his home for, then you can be listing it up to 10% too high. So what do you do? Have your real estate agent prepare a comparative market analysis on what homes SOLD for in your area that are similar to yours. Not what they were listed at, but what they sold for.
Listing At The Highest Price
This was just discussed on my website, but it’s good to repeat. If you interview several agents and one gives you a listing price that is much higher than the rest, you may want to be a bit cautious. It’s not unheard of that agents will want to “buy” your listing. This can cost you money and time and there is an excellent chance your home price will need to be slashed after not attracting any buyers. Always interview three agents and choose the one that can back up their suggested listing price with comparable sales data.
Keep Emotions At Bay
Of course you love your home. Don’t think that as real estate agents, we ignore the huge improvements you have made to your property. However, a buyer will not have the same sentimental emotional attachment to your home when they enter the door. Right now, it’s simply a business transaction. So go into the process by staying objecting. Don’t be offended if you receive a low-ball offer, but rather look at it as a starting point.
Pricing Too High In The Beginning
What are your first thoughts when you see a house for sale and the sign says, “Price Reduced.” The first thing that goes through your mind is that the house was overpriced. Or, you are thinking that something is wrong with it and too many buyers noticed, so a price adjustment had to be made. Maybe you think the seller is desperate. Whatever you are wondering, the goal when putting your home on the market is to avoid having a “price reduced” attached to your “for sale” sign. Once a buyer is under the impression that your home has been on the market for a long time, they tend to stay away. By pricing your home correctly from the start, you are gaining the attention of serious buyers and real estate agents. It is guaranteed to sell faster if priced correctly. If it pains you to the core at listing a home at less than what you want, think about paying extra mortgage payments or household costs when your home doesn’t sell.
Testing The Market
If you are a seller who isn’t in a hurry to sell their home, and in fact, want to “test the waters,” to see which direction the market is heading, you many want to reconsider. By pricing your home at the current home values, you can sell your home and avoid what real estate agents always warn about: Buyers want to see fresh, new homes on the market. If a home has been sitting for far too long, buyers aren’t interested. It’s as simple as that. If buyers feel a home is languishing, they will low ball you a price because they will think you are desperate to sell.
Chasing The Market
So here’s an example: Let’s say a seller insists on listing his home for $300,000 despite the fact that the average home sale in the neighbourhood is $275,000. Of course, months go by and not one single offer has been made. In fact, buyers aren’t even looking at the property. So, the seller reluctantly goes to his real estate agent and says, “List it at $275,000.” The problem? The market has declined and now the house is worth $250,000. If listed at the correct price, then chances are the house would have sold, but now it’s worth an additional $25,000 less. If a seller drops the price too many times, it gives the buyer the impression that something is wrong with the home. A dramatic drop in price implies that the home is stale. So be competitive when listing your home.
Many real estate agents suggest listing your home a little lower than what it is worth to generate interest as well as a possible bidding war. Nothing excites a buyer more than when he hears from a New Windsor real estate agent that a great home just came on the market at a great price. Imagine the traffic that will walk through your home and when buyers realize this. Buyers act fast and will often up the price when they think a home will go fast and others will be bidding. This is a good problem for sellers to have.