9 Reasons Why Sellers Overprice Their Home But Shouldn’t

There are several key components that go into a very successful home sale. But the most critical of all the components is getting your home priced correctly. Yet their are always multiple reasons why sellers overprice their home.

Some home owners will unwittingly overprice their homes and others will do it on purpose thinking it gives them an advantage. Overpricing your home is never a good strategy when selling your home. In the long run overpricing your home may ultimately cost you more.

Reasons Why Sellers Overprice Their Homes

Emotion Based Pricing

You love your home. It served you perfectly while raising your family, but its time to move on. You have created great memories here and have lovingly improved your home to suit your needs.

When the emotions run high it over takes logic. Being emotional about your home can lead to trouble in many ways. Being highly emotional about your home will make you ignore your agents advice not only about preparing your home properly but also about pricing your home properly.

You love how your home looks but will refuse to prepare your home for today’s buyer’s. Emotion will also make you place a value on factors that have little or no value to the home buyers coming thru your home.

Many of the other reasons given below can in large part be because of emotions. It is important to keep the emotions in check and take a logical approach to selling your home.

Pricing Because of Need

Of course you need a certain amount of money to make your next move viable. You need a down payment, you need money for closing costs, you need money for a mover, etc… But don’t expect to price your home on need alone.

Yes, you do need to net a certain amount of money out of your home sale to make it work. And much of that can be calculated up front to see if it works.

But overpricing your house just because you need so much for your next home is not going to fly with home buyers. You need to price your home accordingly to appeal to a broad range of buyers as well as have your home stand out among the competition.

Zillow Says It is Worth This Much

Funny how when Zillow Zestimate says a home is priced more than an agents calculates the seller’s are right there saying that Zillow says its worth more…. but when the Zillow Zestimate is low no home seller says it is too high lets lower the price to match Zillow.

Pricing a home can be a fickle thing. While pricing is based on reviewing historical data there is quite amount of subjectivity comparing houses. The computer algorithm cannot make those subjective adjustments based on condition, location, etc… Or, even factor in where the real estate market is headed.

It takes a fairly skilled agent to price a property properly based on comparable properties that have sold in the recent past. The only way to price a home with some sort of accuracy is with a comparable market analysis, a broker price opinion, or an appraisal.

The Zillow Zestimate is no way an accurate way to price your home. As a matter of fact Zillow’s own CEO sold his home for 40% less than the Zillow Zestimate. How accurate is that?

No Urgent Need to Sell /Testing the Waters

Putting your house on the market to see if you can get a certain inflated price is a bad way to go. Yet every year many homeowners will try testing the waters.

The problem in this internet age, home buyers know your home has been on the market and didn’t sell. Literally that info is at their finger tips.

A home that goes unsold will quickly get stigmatized in this market. There is actually quite a bit of buyer psychology that goes into buying a home. A home left to stagnate on the market or has gone on and off the market will raise the suspicion of buyers making your home a bad choice. No one else wanted it why should they!!

Remember life changes quickly and there may come a time where you may need to sell your house.

Room to Negotiate

This is a big reason many sellers want to overprice. They know what their house is worth but they think leaving negotiating room will get them to the price they want. Unfortunately leaving negotiating room is a strategy that can back fire.

Overprice even 3-5% and you can scare buyers away , 5-10% for sure will deter offers. In today’s market, buyers are willing to pay asking price, if your home is worth the asking price you will get it. Because of the internet home buyers are more savvy than ever before. They have a good sense of what homes are worth.

But over price for negotiating room and buyer’s don’t even want to get involved in the process of making an offer. As emotional as selling a home is, so is buying. A buyer does not want to get “emotionally involved in process that they think will not have a positive outcome.

Also leaving room to negotiate can market your home to the wrong buyer’s. Say you list your home at $550,000 and it is truly a $490ish house. Your home will not compete in the 550k price range and many of the true buyers for your home will cut their price search at 500k. They won’t even know your house exists.

Paying a High List Price

While this is not as prevalent as it was between 2006-2014 pricing your home based on what you payed for the house is not a way to price your home. While you may have payed a fair price in 2006 the fair price for your home in 2010 could have been significantly less than what you paid.

A homes price is effectively good for one day only. The real estate market goes up and down. You could potentially find your self buying when prices are high and having to sell when prices are low.

Ignoring the True Comparable Home To Your Property

A listing agent will prepare a Comparable Market Analysis or CMA on your property. In many ways it will mirror an appraisal as this is what banks will lend upon. Most buyers will be financing your home and the appraisal can make or break you.

So what is a CMA? It is an analysis of homes that have recently sold, that are similar to yours in a relatively close proximity. An agent will look for homes within 20%+/- square feet of you home, built in roughly the same era, are of a similar style and offer similar amenities with in 1 mile or so of your home.

A CMA will present a minimum of 3 or more similar homes with some slight financial adjustments based on the home many factors. Basing your homes price on one home that fits your pricing needs is a mistake sellers often make. You need at least 3 homes.

Yet many homeowners refuse to accept the homes in the CMA that is presented by their listing agent. Always finding a reason why their home is superior. More land, a recently updated kitchen, a huge remodeling project, etc…. But at the end of the day the criteria I listed above are the big mitigating factors. An agent is going to care you spent a 100k on a 700sq foot deck or 90k on a pool or that you have spent 25k completely sound proofing your basement.

Or worse yet, a seller has predetermined his price on properties that an agent would not consider a comparable. For example if a home recently sold in your neighborhood for 850k that is twice the size of your home, it does not function like your home and therefore will not be a comparable property to use.

Paying close attention the comparable properties for you home is what will get your home priced properly.

Choosing an Agent Based Upon the Highest List Price Given

This is an easy trap to fall into. There is an unscrupulous practice called buying a listing among agents. It is where an agent play’s on a home seller’s emotions and promises a high listing price. Now you may interview several agents and yes their prices will most likely vary but definitely no more than 2-5%.

An agent “buying your listing” will promise they can sell your home for a price that is quite a bit above all the others. And of course you want to believe you can pocket another 20, 30 or 50k more…. who wouldnt!!?

The problem is that the agent with the inflated listing price does not back it up with proper comparables. It is your house and your decision. Make sure the list price makes sense. It all has to do with the comparable properties and it is your responsibility to understand them.

Ignoring Market Conditions

Again, this is one reason why sellers overprice their homes. Ignoring real estate market conditions may not have as much bearing today as it does in a down market. Today, a seller can overprice slightly and be a little aggressive on their pricing. If they missed the market slightly, with homes appreciating so quickly the market will catch up in a couple of months.

But failure to pay attention to current real estate market conditions can lead to overpricing quickly in a down market. In a market with home prices declining even a small mistake in overpricing can have disastrous results. You could end up chasing the market down for months with price change after price change.

Realize markets can turn on a dime. If you received a price on your property 6 months ago it can be quite different than today. It is important to re-evaluate pricing on a monthly basis.

Summary of Reasons Why Sellers Overprice Their Home But Shouldn’t

We covered some of the top reasons why home sellers overprice their homes. The good news is it can be avoided. Work with a listing agent that has a good reputation.

But, more importantly, take the time to understand the comparable properties. Don’t be afraid to ask questions. It is your home and your money and ultimately your decision how you price your home for sale.

Other Home Pricing Resources

Jeff Nelson Getting Your Homes Price Right
Bill Gassett The Dangers of Overpricing Your Home
Kyle Hiscock Pricing Mistakes Many Home Sellers
Lynn Pineda Why is Your Homes List Price So Important
Karen Highland Price It Right From the Start

Reasons Why Sellers Overprice Their Home But Shouldn’t is written by Kevin Vitali of EXIT Group One Real Estate.

If you would like to sell your home or buy a new home give me a call at 978-360-0422 and let’s get the process started.

Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest. Including the following communities and the surrounding area- Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham, Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford

Sell Your Home Fast for Top Dollar

Would you like to sell your home fast for top dollar? Who wouldn’t?!!

You hear the stories, the neighbor who put his home on the market and within 3 days received multiple offers over asking. It happens quite a bit. You can sell your home fast to. There really are no huge secrets. A fast home sale for top dollar is a carefully crafted plan that just doesn’t happen.

But remember, even in a good real estate market as much as 30% of the market expires unsold. Yes, unsold the contract expires.

Sell your Home Fast and for Top Dollar with a Carefully Crafted Plan

The plan is actually quite simple to sell your home fast. There are thee major components to selling your home fast for the most amount of money. I Actually call the plan the three P’s. What are the 3 P’s?

Preparation
Pricing
Presentation

Preparing Your Home to Sell Your Home Fast

Take the time to prepare your house properly for the current real estate market. Most sellers have the thought of selling months before they put their house on the market. When you have the thought to sell your house call your local REALTOR immediately.

Your better REALTORS will walk through your house and make suggestions on areas of your home that may need attention. Homes at the very least need to be de-cluttered, sparkling clean and feel fresh. Even homes that may need some TLC where the repairs will be passed on to the buyer can benefit from de-cluttering and a deep cleaning.

If you are really trying to maximize your sale there may be areas that need small repairs or some fresh paint. Don’t forget the outside of your home as well. The curb appeal of your home can set the entire tone for the whole showing. Turn the buyer off before they enter the home and it will be hard to turn around that bad impression to a good one.

In my years of experience selling homes, nothing beats a home that shows well. I am not talking about spending a ton of money preparing your home. But it does require a little work on your part. Buyers are drawn to homes where they feel they are not walking through the door and taking on a massive project. Here is in example of a home that I recently sold when the market was flat. I worked with the sellers for a couple of months. It was a nice condo but it required some de-cluttering and fresh paint. We put it under agreement right away for a number the seller was very happy with.

When preparing your home for sale little things can have a dramatic impact on how buyers view your home. If the buyers are impressed it will bring you higher offers and may create competition among buyers.

Pricing Your Home to Sell Fast

Pricing your home properly is the single most important factor to be able to sell your home fast. There is no amount of marketing or preparation that can sell an overpriced home. Period.

There are no valid reasons for knowingly overpricing your home. “Cant we just try?”, “They can always just make an offer?” or “I want room to negotiate” are all comments I here on a regular basis. To be honest with you, if you do not sell your house in the first 30-45 days you are doing damage to the sale of your home. Read this article I just wrote called, House is not Selling? Avoid Market Rot. Over price your home 3 to 5% over fair market value and your house could sit around too long requiring price changes below fair market value to renew interest in your home. Over price 5%to 10% or even more and your house will most likely “rot” on the market.

What is market rot? Market Rot is a term I use when a house has sat on the market too long. Literally buyers perceive your house as rotting on the market. Your home has become undesirable. No one else wants it why should they!

Take the pricing of your home seriously. Proper pricing is not usually a stab in the dark. Fair market value of your home is determined by a REALTOR providing you with historical history of similar sales in what is called a Comparative Market Analysis or CMA. Take the time to understand the comparable homes that your real estate agent is providing. Ask questions, get involved. Too many times a home seller will go with the agent that suggests the highest list price because it it is human nature. But, I caution you beware of an agent that is “buying your listing”. It is a fairly common practice for unscrupulous agents to promise a huge price for your property just to get you to sign the contract. Then with in one week they are beating you down for a price reduction.

Heres a tip:

It is almost impossible to under price a home. If it is under priced and is presented properly to the market place, it will bid up to fair market value. And, in some case it will sell for a few percent over the fair market value because you have created competition among buyers. When you have competing offers it puts you in the drivers seat allowing you to dictate the best terms and conditions for you. Wouldn’t it be great to have 2, 3 or even more buyers scrambling to compete for your home and get your attention?

Whats the alternative? You wait 90 days you get a low ball offer and then your scared to lose them because you haven’t had a showing in 30 days.

Pricing your home properly is 70-80 percent of your carefully crafted plan to sell your home fast. I am not talking about giving your home away. I am talking about pricing your home fairly. Remember buyers are not stupid they know when they see a house that is priced well for the market. Most buyers are working with buyers agents as well, who are counseling the buyers on the price of your home.

Presenting Your Home Properly to Sell Your Home Fast

There are two key pieces to presenting your home properly to potential buyers to be able to sell your home fast and for top dollar. Your homes image and your homes presence. Remember, today’s buyers are making decisions about your home online before ever seeing your home. I tell home sellers your first showings are online. If you don’t compel the buyers online they will not come for a personal showing of your home.

A recent study that tracked ocular movement of buyers viewing an online listing revealed that you have seconds to capture a buyers attention with quality photographs. It also revealed that the photographs were the single most important piece of a listing the buyers are concerned with.

So the first piece of presenting your home is high quality real estate photography. Hire an agent that will either hire a professional to take photographs of your home or an agent that has the capabilities of doing so themselves. Photographs quickly taken with a cell phone or a point and shoot camera is not acceptable any more. The study goes on further to explain that that exterior photograph of your home is generally the most important. Its make or break time.

Below is a sample of the same house. The left was taken by me the right by another agent. The right photo is poorly exposed the verticals are not vertical and it is taken on a dull grey day. My photo evokes a response it is taken on a sunny day properly exposed and it evokes a feeling. This looks like a cheery house set on a nice setting. Its just the matter of a little know how and coming by at the right time of day to take the photo.

The front line of presenting your home is having superb images of your home that will compel a buyer to want to visit your home.

The second key ingredient is your homes presence online as well as offline. An agents marketing plan will expose your property to the largest pool of buyers that would possibly consider buying your home. Today a real estate agents role, when selling a home is that of a marketer.

91% of all home buyers are heavily using the internet to find their new home. This tells us we need to leverage the internet with the Multiple Listing Service, Social Media, Syndication and more….. and the best way to market your home is provide high quality images and comprehensive information on your home.

Other ways to expose your home to potential buyers is by marketing to other agents through networking and blast emails, signage and brochures.

This is a quick overview of how to expose your home to the market to sell your home fast and for top dollar. There are obviously other things can be done but I wanted to take the time to point out the two key ingredients to market your home.

There Really is No Secret to Selling Your Home Fast and for Top Dollar

Selling your home fast is not a huge secret but it does require a carefully crafted plan. The three pieces to selling your home fast for top dollar are Preparation, Pricing and Presentation. A savvy REALTOR will walk you through each piece to maximize the sale of your home. Most of my home sales happen very quickly and the homes sell very close to asking or over asking. There are also many benefits to selling your home fast. Here the top 3:

You will mostly likely get more money for your home by creating competition among home buyers.
Less hassle. lets face it showing your house for months and months on end is work and tiring…. packing up the kids, straightening up the house, leaving at inconvenient times. Wouldn’t it be better to sell it in a week?
Negotiations and home inspections become easier. If you have buyers competing and your home goes under agreement quickly you will find negotiating goes easier and also buyers are less likely to nickel and dime you on the home inspection.

I am able to do this time and time again. Here is a recent home for sale in Dracut I was able to sell fast and for maximum dollar. 96 hours and under agreement!! Funny thing this home was listed for 4 months prior. What did I do differently? Staged the home, provided quality real estate photography and exceptional online marketing as well as take some time to help the home seller prepare their home! Want more… here is another Melrose MA home, where these principals were embraced by the home seller. The home sold the first day it was listed with over 50 groups of people through the open house. Multiple offers and under agreement by the next day for over asking…

Happy House Selling!!

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This post, Sell Your Home Fast for Top Dollar, is provided by Kevin Vitali of EXIT Group One Real Estate. If you would like to sell your home quickly call me at 978-360-0422. I would love discuss your upcoming home sale. And of course your first consultation is free with absolutely no obligation.

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