It always starts out innocently enough.
Mr. and Mrs. Homeowner decide to make their move forward and place their home on the real estate market.The time to hire an agent to list and market your home.
So you've read my past blogs and understand how important it is to interview multiple agents, please keep in mind one of the main reasons is to be sure their pricing is consistent. Here is where home sellers may make their fatal mistake: Upon interviewing several agents and although all may seem qualified, naturally you may “connect” better with one who tells you your home will sell at a higher price than the other agents. Ahhhh...sweet music to your ears?...it's only temporary! By the end of the performance, you'll need ear plugs!
Most all Realtors performing Comparable Market Analysis on your home will be using the same inventory of homes sold in the area to compare to your home. When you sit down with each Realtor, they should explain in detail and show you in writing where/how adjustments were made between your home and homes sold; EXACTLY how they came up with their estimated selling price. Some less than professional agents may kick certain pricing areas up a notch to raise your overall estimated 'selling price' simply to get your listing and deal with the consequences later- consequences bringing your selling price way down and/or sabotaging your sale. Most agents are professionals, if their estimated selling price of your home is skyrocketing above the rest? It may be their analysis is not in depth enough or you never know- there is a slim chance they could be right! You need to analyze each market analysis to protect the selling price of your home, but be sure to follow your head and not your heart on this one. The Waiting Game- DONT Play It!!
Once your home is listed and you don't see activity within the first week or two, you may start questioning your asking price. Unfortunatley, if you've made the mistake of overpricing- this is the time to bring your price down. The last thing a listing should do, is wait longer for activity. The longer you wait, the lower the selling price in the end. Moving quick on the price reduction is the only chance for recovery. Remember, no one wants 'stale bread', the more stale it becomes on the market, the longer it's listed-when an offer finally comes in, buyers will want a bargain.
___________________________________________________________OVERPRICING MAIN OBSTACLES:
1. APPRAISAL DIFFICULTIES
Even if you happen to find a buyer willing to pay more than fair market value for your home, the raw fact is that more than 9 out of 10 buyers require a mortgage loan in order to purchase. If you house will not appraise for the agreed upon purchase price, the sale is most likely destined to fall through.2. A SHORTAGE OF SHOWINGS
Buyers, today, are quite savvy. They are well educated about the real estate market. They often know far more about competing properties than sellers know and they are hell-bent on finding the very best deal they can find. If your house is overpriced, they won’t even bother taking a look at it… much less make any offer on it.3. BRANDING PROBLEMS
Here’s the deal… whenever a new listing comes on the market, every real estate agent in the area who has a buyer looking for a home like it immediately checks it out to see if it’s a good fit for their buyer clients. When they see your overprice home, they BRAND it as “overpriced” and don’t even tell their buyers about it. They may watch it to see if you reduce the price to fair market value but the buyers won’t even know it’s on the market. Re-energizing any interest in your listing is likely to require drastic measures… like pricing much LOWER than fair market value.4. DON’T SELL YOUR COMPETITION
The concept is simple but for some reason we seem to forget it when selling real estate. That concept is that “price sells” and buyers do shop for the best deal around. When you overprice your house, you make all the others around you seem like bargains. I don’t think there’s any more frustrating feeling than seeing your neighbors put up SOLD signs
… especially when you know
that your house is nicer!5. AGAIN, STALE BREAD DOESN’T SELL!
Just like bread on a grocery shelf, the longer your house sits on the market, the more likely it is to become stale! Think about it… you’ve likely seen homes that seemed to always be on the market (signs go up and come down and go up and come down…). It is only natural to wonder “what is wrong with that house?”6. STARTING BEHIND THE EIGHT BALL IN NEGOTIATIONS
Okay, the truth is that some overpriced homes do get offers (they are almost always much lower than you’d think) but what happens when you counter the low offer? The buyer knows that you home has been on the market longer than the norm and they know where your starting price was and how much you’ve already reduced it. They don’t view this favorably for you.
In fact, they use their perceived notion that you might be desperate to negotiate much harder than they otherwise would.7. OPPORTUNITES LOST FOREVER
All buyers search for homes the same way… they search in price blocks (price ranges). If your house is priced above the fair market range, you will lose a large percentage of buyers who are simply not even looking in the range in which you are priced. If fair market value is in the 150k to 175k range and you price at $190,000 to allow room to negotiate, the fact is that most potential buyers will not even be aware of your house.
In today’s market, most buyers look at about 10-15 homes before making a decision. And most buyers do not look in a limited geographical area because they are looking for a deal. If you are priced even just a little bit too high, you lose the opportunity to attract most buyers.The bottom line is that setting a competitive price, relative to your competition, is an essential component to a successful marketing strategy. Although, it's human nature to gravitate toward the agent who will set the highest price on your home...it's you who will ultimately make the final call AND potentially pay the price. When your'e ready to market your home, be sure to handle this move very wisely!!