Of course you want to get the most amount of money for your home. That is natural.
But the price you set for your home will determine many things thru the life of your listing…. not just how much you net in your pocket.
At the end of the day properly pricing your home boils down to the comparable homes that have sold around you. Your real estate professional should prepare a report or CMA for you to understand what similar nearby properties have sold for in the recent past.
This past year I had a seller who arbitrarily priced their home with out looking at the comps of their home.
They had it in their head that their house was worth X amount of dollars and they learned some lessons the hard way.
They were certainly disheartened. And, it was stressful and aggravating for them.
But as they lowered their price more in line with fair market value they same many aspects of the home selling process change.
By pricing your home properly you can get rid of much of the aggravation that comes with selling your home.
The Pricing of Your Home Determines 9 Aspects of the Selling Process
Pricing your home right from the get go will get rid of much stress, aggravation, work and will make your transaction go far smoother. At the end of the day pricing your home right will save you time, aggravation and even money!
The Level Of Interest in Your Home
If you set the price your home even 3-10% to higher than fair market value you could be drastically reducing the activity on your home. Buyer’s are more educated then ever before. The internet has empowered home buyers with information. They know what similar homes have sold for, that information is right there out in the open. many buyer’s are also using buyer’s agent who are counseling them on the fair market value of your home as well.
It goes without saying the closer you are to the price a group of buyers is willing to pay for a home the more activity you will have.
When your home is compelling to buyers, showings are scheduled. There are several thing that make a home compelling. Price being one of them. A home that is compelling at $395,000 will probably not be at $440,000.
Buyer’s may see a home they like on the internet but feel it is overpriced and they won’t even schedule a showing because they think they will be dealing with an unreasonable seller. The potential buyer is lost
If the Right Buyer Shows Up
Are you even showing your home to the right buyer? The example above is perfect. If your home truly belongs in the $375k to $400k price bracket many of the buyers that would find your home compelling will probably be stopping their home search at $400,000.
In lower to moderate price ranges most buyers are buying very close to the top end of their mortgage approval.
You price it improperly at $440,000 you aren’t showing your home to the true buyer of your house.
It wont stand up to the competition. The competition may be larger, be in better condition have more features and benefits, etc… your home is just helping to sell other homes in the higher price bracket.
Take it one step further. Years ago I had a house for sale in Haverhill. It was priced at $285,00 and sold immediately for $290,000.
In the same neighborhood was essentially the identical house, in inferior condition was a for sale by owner at $320,00. Both houses only had one bath. I know because I tried to get the listing!
But essentially to date there had not been one house in Haverhill with only one bath that sold for over $275,000. Every buyer walking into the home was sorely disappointed because every other home they were viewing in the $300k price range was larger and had at least a half bath more if not 2 or 3 full baths. The house was not competing!
You want the right buyers to schedule showings for your house. It is critical to price your home for the market.
The Feedback
Funny thing, the feedback changes as you go from overpriced to being in the range of fair market value for your home. An overpriced home just get overall bad feedback or sometimes just very generic feedback. Irregardless there is no interest.
As you price your home correctly your feedback will be more specific and questions are asked. You will still get the occasional negative comment but they will be more focused and very specific. And usually there will be more questions about the home.
Questions are good! It means the buyer may be considering your home.
How Long Your House Is On the Market
Selling your house is work!! Preparing your home to get it ready for the market, keeping it in tip top showing condition, packing up the family for private showings and open houses, accommodating buyers schedules, etc…. all takes time and energy.
Average days to offer in Andover Massachusetts for the past 6 months is 29 days.. Many homes going under with in the first 10 days for over asking price. It should go with out saying if you have your home priced properly it will sell in the first 30-45 days.
But what about those sellers that were on the market for 6 or more months!! The amount of energy wasted. Realistically, for most homes to maximize your sale you want to sell in the first 45-60 days.
After 60 days the buying public begins to become suspect of your house. Whats wrong with it? why has no one bought it? It takes lowering your price below market value to regain the attention of the buying public.
Your Level of Stress and Aggravation
You worked hard to get your house on the market. Now you wait patiently wait for an offer. Have you chosen the right list price, have you chosen the right agent, why isn’t anyone making an offer….. The doubts set in. Never mind preparing for countless showings.
The longer it takes the more the stress and aggravation builds for most home sellers.
But again if you price properly by carefully considering the comparables, you will certainly have more confidence and your house should sell with-in 30 days.
Getting the job done and moving on quickly lessens the stress and aggravation of selling a home.
The Quality of the Offers
Negotiations certainly go much smoother when your house is priced properly. In this market if you are priced at near fair market value your home will go quickly, but there is a also a good chance your offer will be for asking or even over asking.
Again buyers are not stupid they have a good idea what houses are worth in your area. it is much easier to close a small gap of a few percent than it is to close the gap of 5% or 10%.
Pricing your home properly will usually allow the negotiations to go much smoother and quicker. A large percentage of home buyers are willing to pay fair market value. They just don’t want to overpay.
But they are also afraid to lose the opportunity of a well priced home and don’t want to risk losing a home over negotiations.
Home Inspection Issues
If home buyers feel they are paying a fair price they are much more willing to take on small inspection issues or be far more reasonable when negotiating home inspection issues.
If you negotiate the price hard and the buyers feel they have been forced to overpay for the house they will be much tougher on any problems that may arise during their home inspection.
If you can’t come to terms over the home inspection, you will have to put your house back on the market leaving buyers wondering what was so wrong with the house.
Where as your home buyer feesl they are paying a fair price they don’t want to lose the house over a few hundred or even thousand dollars in any minor problems that might arise in the home inspection.
Danger of Your House Not Appraising
While your home may be overpriced, its not to say that once in awhile the perfect buyer comes along that is willing to pay more than the general buying public. It does happen occasionally but certainly not with any great predictability. For example a daughter and her family is moving three houses down from her mom. That is a perfect buyer. Being that close to mom has a value to this family, but no to the bulk of buyers for this home.
Where the problem arises is when the home wont appraise for the agreed upon price. A bank won’t lend on anymore than the appraisal price. In that case the buyer will have to pony up the extra money or you need to lower you agreed upon sale price.
Not every buyer has extra money to pony up the potentially 10’s of thousands of extra dollars to make the deal work. You risk your deal falling thru and having to put your house back on the market.
The Price of Your House Will Ultimately Determine How Much Your Home Sells For
Homes that sell in the first 30-45 days usually sell for more money than homes that languish on the market.
Top dollar is achieved when buyer’s want to compete for your home. If your home is priced right the buyer’s will be scrambling to buy, you get stronger offers and potentially create a multiple offer situations so you can choose the offer you like best.
Your first buyer’s thru the door after you first list are made up of the best buyers for your home. They have been out in the marketplace, they are educated on the market, they have lost homes by under bidding and or over home inspections. They have felt some pain and they are ready to buy. These buyers have also exhausted all the old inventory in their range and are waiting for the next great house to come on the market.
Alternately, as a house sits on the market the buying population loses interest. If your home is overpriced and you did not adjust the price quickly enough you will have to slightly under price your home to gain buyer interest again.
Summary of The Price You Set for Your Home Determines 9 Things
Properly pricing your home out of the gate will allow you to get your home sold relatively quickly with less stress and aggravation and as statistics show home sold in the first 30 days sell for more money.
The internet has picked up the pace of the market and has empowered buyers. They sense when a home is overpriced. They know when a home has come off the market and had to come back on again over failed home inspection or mortgage. Unfortunately that leaves a buyer with a negative impression of you home.
How you price your home will certainly control many aspects of your home sale, not just how much you net in proceeds from the sale. A buyer that feels they are paying a fair price is usually far more agreeable and pliable than a buyer who has felt they are forced to overpay.
Other Resources:
- Xavier De Buck Real Estate’s Dirty Little Secret of Why agents Take Overpriced Listings
- Bill Gassett Why Overpricing has Damaging Effects
- Paul Sian Finding the Right Buyer for Your Home
- Michelle Gibson The Seller Who Wanted to Test the Market and Got Burned
- Teresa Cowart Price to Sell!!
- Lynn Pineda My Home Didn’t Sell
The Price You Set for Your Home Determines These 9 Aspects of Selling Your Home is provided by Kevin Vitali of EXIT Group One Real Estate of Tewksbury MA. If you would like to sell your home give me a call at 978-360-0422 and let’s get the process started.
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