Every seller wants to get as much money as possible when selling their home. The natural inclination for most people is to price high, thinking you can always come down in the future.
But a listing price that is too high can be a disaster, and frequently nets the seller LESS money then they ever anticipated—even after paying a real estate commission!
Why is this?
Because buyers will reject your home in favor of other homes in a reasonable price range. And if that doesn’t frustrate you, think about this: Buyers will use YOUR home to compare and justify the purchase of a similar, but correctly priced home. Yikes!
But the problem gets worse…
Sorry, but it’s a fact that 96% of all homes are sold by REALTORS® . So whether you sell your home yourself, or through a professional, you MUST be able to attract the REALTOR® community to your home.
This is what most FSBO (For sale by owner) books and websites fail to tell you.
Problem is, agents who otherwise would readily bring buyers through your home will automatically dismiss it because it’s priced too high. (Yes, we do this.)
REALTORS® don’t make money showing homes…we make money SELLING them.
We know market values in your area. And if your home is priced too high, we’re not even going to waste our time showing it. (Ouch!)
And word spreads like salacious gossip within the real estate community. If your home gets “branded” as overpriced, not only will agents NOT show it, BUT you’ll have to lower the price further than you ever expected…just to get them back!
[Breathe and read that last line again!]
Agents Simply Will NOT Show Overpriced Homes Because We Work By Commission. Showing Overpriced Homes That Will Never Sell Means We’re Working For FREE.
And this Tesla, botox injections and Mastros dinners don’t pay for itself. #realtalk
But we’re not out of the woods yet…
You see, your home is MOST valuable when it’s new on the market. And if you delude yourself into thinking you can price it high and come down later, you’re in for a big surprise.
Here’s what’ll happen (looking into my seeing in the future glasses)….
After months on the market without even a tiny nibble, you or your agent will decide to reduce the price. Even with your price reduction, there’s still little activity because your home has been “branded” as overpriced and is stale. Like previously delicious Maggianos bread that has been sitting in an open basket for weeks. (Hmmmm, I must be hungry…)
So, after a while longer you decide to lower the price a little more. Now you’re pushing the limits on what you wanted to receive in the first place.
Finally, you start to get a nibble or two.
Problem is, your home has been on the market for months now. And when you finally receive an offer, you can bet your bottom dollar it’s going to be discounted even further.
Because buyers usually want to know how long a home has been on the market before they decide how much to offer. And the longer your listing has been sitting unsold, the more desperate your home looks.
(And desperate ain’t cute…)
Like sharks smelling blood, buyers will see your home as prey.
And their offers are going to knock you over, flat on your back with no warning. But you’ll have little choice but to negotiate. You have no other options.
So… How could this all have been avoided?
EASY– By simply pricing your home correctly in the first place.
Homes That Sell Fastest Also Sell For The Most Money!
It’s a known fact: the very same reasons that make a home sell fast will make a home sell for the most money. Homes are best positioned to sell when they’re new on the market.
Here’s a little help for pricing your home.
The first thing you need is VALID local market information. Take a look at homes that have sold in your area. Compare the price sold as a percentage of list price. This will help you get a feel for the average discount in the area.
Generally, your list price will be within 2.5 – 5 percent of what you expect the final selling price will be. But be careful!
The amount of discount should be dictated by real world FACTS from YOUR AREA, not some real estate agent’s guess on what he or she expects offers to come in at. If the selling market is hot in your area (like most areas in DC), there will be little or no discounting. There may even be bidding wars, and homes selling for more than list price. (I know you like the sounds of that!)
On the other hand, if homes are not selling well, you will need to be flexible.
Next, DO YOUR HOMEWORK to determine what your home is worth. Use an agent provided CMA and do a total market analysis.
When you narrow down your area, you need to correct values for distressed sales, divorces, remodeled homes, and other events that affect the value of other homes that have sold near you.
Each factor (distressed sale, condition, siting, location, etc.) will add to or subtract from the value of your home. And in most cases, the only person who can really give your this information is a GOOD agent—someone who has extensive experience valuing homes.
Not withstanding all your hard work, in the end…
The MARKET Is the Only Determinant Of The VALUE Of Your Home
There’s an old saying in real estate: “Sellers are NOT the deciders of what their home is worth, but they ARE the deciders of how quickly their home will sell.”
The REAL value of your home is what a willing buyer will pay for it, and what you will accept. Nothing more. Nothing Less.
But remember this: Markets and the economy change. If interest rates rise by a point, people who could otherwise afford your home may not be able to any longer.
This will ultimately affect the value of your home. So you may need to adjust your price over time. Stay on top of market events, both nationally and locally.
If the market’s declining, it’s best to discount your price up front. If the market’s rising, be prepared for full price offers, or even bidding wars. (Yeah, I know you like the sound of bidding wars!)