The Price is Right
In today’s market, where demand is outpacing supply in many regions of the country, pricing a house us one of the biggest challenges real estate professional face. Sellers often want to price they home higher than recommended and may agent go along with it to keep their clients happy. However, the best agents will tell you the truth, whether it’s something you want to hear or not. There are several advantages to proper pricing when it comes to selling your home.
1. Faster Sales: Properties that are overpriced remain on the market longer and become tired. Properties which are properly priced create excitement with potential buyers who jump on the home since they have already seen everything else on the market.
2. Increased Response from other Realtors: Realtors follow the market closely and know when new listings become available. They know and understand the price range for their clients and if your property is overpriced, realtors will not show it and often buyers will not find it since they tend to search in price blocks they are pre-approved for. In fact, an overpriced home may help competing properties that are properly priced sell first.
3. More Money to Seller: Usually the first offers are the highest and best. The longer a property stays on the market, the lower the final sales price will be. Statistics show that homes are most marketable within the first several weeks of being listed. The longer the property is on the market, the more doubt buyers have regarding the home. Even if they like it, why is it still on the market, what’s wrong with it?
4. Better response form Advertising and Sign Calls: Properly priced homes will receive better response from both qualified buyers and agents working for protective buyers. This will result in more showings and ultimately, a shorter time on the market.
5. Easier to Finance: Properly priced homes are more likely to pass appraisal and are easier for lenders to finance, resulting in faster, more economical loan closings for prospective buyers.
Common Seller Justifications for Over Pricing
“We need the money” – Don’t we all, however the house will sell for what the market at the time says its worth. The home’s value is not what the seller paid for the house, plus appreciation, plus improvements over the years, plus closing costs, plus negotiation wiggle room.
“They can always make an offer” – Buyers search for a home by price range and their pre-approval boundaries. If a home is overpriced, the people qualified to buy it, do not even see it as it’s listed higher than the price ranges they are searching within. Remember, realtors don’t determine what buyers buy, rather what they see and no-one wants to waste their time showing homes a buyer cannot afford or the seller is being unrealistic in their expectations.
“Couldn’t we just try it for a couple of weeks?” – The worst time to overprice is during the first few weeks when the majority of the market activity occurs and the home should be having the most interest. If you lower the price after those initial few weeks, the potential buyers have likely gone elsewhere.
“We can always come down” – Again, the first few weeks of market activity are the most crucial in finding a buyer at the right price. Reducing the price sends mixed signals to the market place, where buyers and agents begin wondering why the property is being reduced and then they wait to see how many further reductions there may be.
“We’ve got a lot of money invested into our home” – Value is determined not by what you put into a home but what a buyer gets out of it. Buyers determine value based on current market conditions. Furthermore, the changes made within the home over the years may not be to everyone’s taste so you can’t expect to get back every penny that you put in. What you paid for the house, the cost of improvements, the type of improvements, how much you owe and the cost to rebuild the house today do not affect the current value.
Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Ultimately you need an agent who will tell you what you need to know rather than what you want to hear.
“Jennifer is an amazing realtor, and will be our first call in the future. From our first meeting, she showed attention to detail that helped me understand my home’s value, trends in the market, and how to get the most out of our sale. She hustles, and gets the job done. Based in a large measure on how effective she was, our house sold 1 month after meeting her.”
“Jennifer worked closely with us to successfully list, market and sell our home. She advised us on the key updates needed to sell the house (as well as what potential updates were not as strongly needed or would not add any significant value to the house). Her attention to detail was great – she even emailed me examples of replacement lighting and chandeliers. Her understanding of the local market was excellent and she prepared a detailed report on local sales that helped us to understand house pricing in our market and what our potential home buyers were looking for.”