When selling your home pricing it properly is 80% of marketing the home. Overpricing your home has consequences. No amount of advertising, open houses or money will sell an overpriced home.
Take a Hyundai Elantra and park it next to a Mercedes SL500. On thesurface they both have a steering wheel, 4 tires a windshield and they are roughly the same size, yet there are two very different price tags. You will never get a car buyer to pay the $110,000 price tag the Mercedes has for the Elantra which is valued around $14,000.
Same thing is true for houses. You will not sell a $550,000 for $700,000. Buyers are not naive and they are more empowered than ever with access to information about real estate on the internet.
For many your home is your priced possession. It is probably the biggest investment you have ever made and the emotions run high and can cloud your judgement when it comes time to price your home properly. Emotions can lead to overpricing your home. Of course every home seller wants to believe their home is worth more and will find any means to justify a higher price.
Your listing hits the market. There may be a little bit of interest in the beginning. Maybe a few showings or maybe none. Realistically, a typical home should be at a bare minimum receiving 2-4 showings a week if not more.
You will be excited for open houses because people actually show up. But guess what, people always show up it does not mean they are qualified it just means they are nosy.
As the weeks go by showings become spotty if non-existent.
You will become irritated with your agent. You want more open houses, you want ads in the New York Times, you want TV advertising… but guess what your house is being rejected on a daily basis by home buyers on the internet. Buyers don’t look in newspapers anymore. If a buyer is interested they call and schedule a showing based upon what they see on the internet about your home. It is that simple.
Now you are approaching 90 days on the market. Your house should never sit on the market that long, unsold with out a change in price, condition or marketing. But you still think you have a Mercedes when you really own a Chevy Malibu.
Eventually your house expires on the market unsold. You are angry and frustrated at your agent, the real estate market the buyers. At the end of the day, it is your house. It is your responsibility to learn about the local market to determine the right price on your home.
There is nothing more disastrous than not selling your home. All your hopes and plans have to be put on hold until you
regroup and figure out what to do next. Never mind the time and energy you put into listing your home and frustration levels running high when the buyers aren’t coming or putting in offers.
Your still defending your pricing decision. I spent 100k on a deck, my kitchen remodel was 70k 15 years ago…. ok you will probably never going to recoup 100k on a deck and if you remodeled your kitchen 15 years ago its on its way to be outdated now.
But, your starting to think maybe your overpriced your home a little, you tell the agent well the buyers can just put in an offer.
Yet the offers never come. First off, if you are moderately to seriously overpriced your home is not even being viewed by the true buyers of your home. Your house is being viewed by buyers that have more money to spend and your house does not stand up to the competition in that price range. It is probably not even on the radar screen of the true buyers for your home.
A buyer looking for a 550-600k home stops their home search at 600k they aren’t even looking at homes to 700k or even 650k.
Massachusetts Real estate statistics show most homes that are sold sell for with in 1% to 3% of the asking price. Buyers and buyers agents are not going to waste time looking in a price range that home buyers cannot afford.
So even if you insisted on overpricing your home. Buyers will be very hesitant to put in an offer on your home. As a listing agent, most buyers are coming through the house with their buyers agent. The listing agent will have very little control over the buyers as well as the seller has very little control over the buyer. As a home seller learn what you can control and what you can’t.
Even if you do get some home buyers that are potential buyers for your home this is why they wont put in offers.
There are many downsides to overpricing your home. Lets cover a few here.
Let me re-iterate. overpricing your home will net you less. The chart below is data I pulled for Tewksbury MA. 277 single family homes sold in the past year. Here is the relationship of how many days it took to get an offer in relationship to the median selling price versus the percentage it sold for in relationship to the original list price.
|Day to Offer||Median Sale Price||Sale price to Original List Price|
There is definitely a correlation to how overpricing your home can effect not just your sale price but the time your house spends on the market
. If you are looking for top dollar on your home it is critical to sell your home the first 45-60 days.
Price you home at market based on comparable properties that have sold. Sit down with your real estate agent and review past sales of homes in the area with similar:
This is a rough guideline for using comparable homes used with the first 3 items being the biggies. Obviously homes can be unique, some more than others. Your agent should have a good handle on all what goes into pricing your home for your area. They should be able to explain pricing concept and the local real estate market to you.
The banks have strict guidelines for location, square footage and age of the comparable homes. If an appraiser goes outside of the guidelines they need to have a very good explanation. So should your agent.
Pricing your home properly for the current real estate conditions is the most critical component of selling your home. It is a decision that should not be taken lightly and as a homeowner you should take the time to understand how and why an agent is recommending a price on your home. Statistically the quicker you sell your home the more money you will get on the sale of your home.
Overpricing your home is going to cause you to be very frustrated. In addition, it most likely will net you less money in the end. Getting the price right on your home from the get go, makes for a much smoother transaction. The sooner you realize your home is competing for buyers attention, the better off you will be.
The worst thing that happens is you invested time and money into preparing your home and keeping it in tip top showing condition. Only to than have it expire on the market unsold. On top of that you had plans to be somewhere else.
Remember, every house is saleable for the right price, in any market. Hire a REALTOR with a good reputation. Avoid using the REALTOR that gives you the highest price with out backing it up with valid data.
Other resources on overpricing your home:
Overpricing Your Home- and The Disastrous Effects It Can Have, was written by Kevin Vitali of EXIT Group One Real Estate. Kevin has a strong marketing plan that will get your house sold. Want to discuss your upcoming move call Kevin at 978-360-0422.
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