Selling A House: Make Sure The Price Is Right
If you are thinking about selling a house, then there is one thing you must get right: the price. Common sense says if you price too high, you won’t sell, and if you price too low you will leave money on the table. But there is a lot more to it than that.
In this post I will look into ways you can ensure you price your home correctly when selling a house, and the affects of overpricing can have on your sale.
First, let’s talk about why it is so important to price your home correctly. If you overprice your home, you will actually end up selling for less money.
Buyers will ignore your listing, and you will languish on the market. Once you have been on the market for months, buyers will think that something is wrong with your house.
If you keep dropping the price, this will only fuel buyer’s fears that something is wrong.
If you stick with your unrealistic price (as opposed to dropping the price), then buyers won’t waste their time because they will see you as being unreasonable.
When you keep dropping your price, you are doing what is known as “chasing the market”.
You started off above the market, and now you are trying to find out where it is.
However, at this point it is too late. It doesn’t matter where the market is, because you will have to get below it to generate interest. This is how you wind up selling for much less when you overprice as opposed to starting out at the right price.
A big mistake sellers make when selling a house is trying to test the market. They will start off with a higher price because they “can always drop the price later”. This can be a huge mistake.
The most interest your listing will generate is in the first few weeks it is on the market. If buyers see you are overpriced, they will move on–and you may not be able to get them back later.
Exposure is another key when selling a house. But one statistic most home owners do not pay attention to is Days On The Market. The longer your house sits on the market, the worse it is for the seller.
If the Average Days On The Market for homes for sale in your neck of the woods is 45 days, then you do not want to be amongst the homes that are pulling that average up.
If you start off overpriced, but quickly adjust the price more in line with the market, then most buyers will recognize that you realized that your first price was off.
However, there is a fine line here, and this shouldn’t be used as an excuse to try and test the market.
A better strategy that is used by smart listing agents is to price a home below market value–by as much as 10% or more.
This will attract a lot more buyers, and can lead to multiple offers. In this situation, the price gets driven back up closer to market value. If you are thinking about selling a home, isn’t this scenario much more desirable?
Given the fact that we are in a sellers market in much of the country, many sellers may think that selling a house is as easy as putting a sign in the yard. That, however, is not the case.
Even in the current market where buyer demand is strong and inventory is lacking, buyers are still avoiding overpriced homes.
Why try to test the market in an attempt to squeeze out a few more bucks? What ends up happening is you lose money.
In the scenario described above–where the home is listed at below market value and creates a buying frenzy–how do you think that would play out in a market where demand far exceeded supply? Much like the current market?
Selling A House: How To Price Correctly
Here are the two biggest mistakes home sellers make when pricing their home. First, relying on websites like Zillow for the current home value.
Zillow only has access to some data in determining home values–mainly tax records.
Zillow can be a good tool for getting a ball park idea of what your home is worth, but it is not a reliable resource for pricing when selling a house.
In fact, Zillow even states on their website that their “Zestimates” are off by as much as 10%,20%, or even more.
This is because Zillow does not have access to the information they need for accurate home values: The Multiple Listing Service.
A second mistake sellers make when pricing their home is relying on current home prices.
What homes in your neighborhood are listed at has little bearing on the actual values. Many of the list prices are off for various reasons.
Many sellers will price their home above the market, falsely believing it will net them more money (or, the market will “catch up” to them). Too many Realtors will let home owners set their price, either because they do not know better, or worse, because they “bought” the listing.
This is a tactic where the agent will tell the owner that they can sell their home for more than what the market says.
They do this because they know the owner will likely list with the agent that recommends the highest price–whether or not that price is realistic. The agent figures they can get the owner to reduce later, after they have secured the listing.
The only reliable numbers to use when determining a home’s value is recently sold homes.
Both Realtors and Appraisers rely on this information from the MLS.
If you are thinking about selling a house, the best bet is to rely on the opinion of your listing agent. They should be able to provide you with the latest market comps to show you the best price to list at without overpricing it.
As an alternative, you can hire a professional appraiser to do an appraisal before you list. Then, you will know your home’s current value. You will also have another tool in your marketing arsenal–a current appraisal in hand that clearly shows your asking price is justified.
Either way you go, you will still be better off listing at or 5%-10% below market value to ensure you sell your home fast, and for top dollar.
If you are thinking about selling a house in Charleston SC, then bee sure to visit my sellers page on my Pam Marshall Realtor website.