I have compiled a summary and links to 5 REALTORS discussing pricing your home right and the impact it has on you, the seller. As one of the REALTOR points out and I agree wholeheartedly, is “no amount of marketing will sell an overpriced home”.
Pricing your home properly based on market data is the most important aspect of selling your home.
Bill Gassett, Hopkington MA- Factors to Consider When Pricing Your Home
Bill has an excellent article, Factors to Consider When Pricing Your Home. In this article Bill states that studies show that the longer your house stays on the market it ultimately weakens your homes appeal and will lower the amount you will get for your home. Homes sold quickly will usually net the most amount of money for the seller.
Bill also points out that pricing mistakes mistakes are made when sellers use Zillow, Assessed Value, Refinance Appraisal and Unscrupulous or Unskilled Agents. None of these are accurate ways to price a home.
A skeilled agent will use a Comparable Market Analysis that compares similar homes to yours to determine a homes value. Historical data gathered from the Multiple Listing service is what helps determine your homes value in the current marketplace, not what your neighbors think.
His last piece of advice is if your home has been on for a month or so with little activity and no offers it is important to act quickly and drop the price.
Teresa Cowart, Richmond Hill Georgia- Consequences of Pricing a Home Too High
Teresa article Consequences of Pricing a Home Too High explains the negative impact your over pricing will ultimately have on the sale of your home.
- Priced to high and sitting on the market too long will make your home sell for less
- A home that is priced too high will not generate interest, buyers will not be excited about it hitting the market.
- Your out of pocket expenses will end up being more as your house sits on the market unsold.
- A home that is priced properly makes the negotiations go more easier and quicker.
- No price reductions will be necessary if your home is priced correctly.
- The first two weeks is critical in selling your home. If it is priced to high you have not captured the buyers attention.
Pricing a home too high will ultimately hurt you in the pocket. Work with your real estate agent and get the pricing right from the get go.
Paul Sian, Cincinnati REALTOR- How to Price Your Home to Sell
Paul’s article How to Price Your Home to Sell makes two excellent points.
First is he discusses the problems inherent in using Zillow’s Zestimate. Zillow uses an algorithm that compares nearby homes. Unfortunately, Zillow does not see the condition of your home or cannot make a judgement on neighborhoods like buyer’s can. The human factor is missing.
Secondly, Paul points out the investment you have made in your home may have nothing to do with the selling price of your home. For example if you spend $100,000 on landscaping on a home in a $200,000 neighborhood, as much as you want to, you will never recoup the cost of an upgrade. It boils down to what are similar homes selling for in your neighborhood.
Buyer’s know that being the most expensive home in the neighborhood is not the best investment.
Kyle Hiscock, Rochester NY REALTOR- Real Estate Pricing Mistakes
Kyle’s article Real Estate Pricing Mistakes that Sellers Need to Avoid discusses some of the common reasons sellers tend to overprice their properties. No amount of marketing will sell an overpriced home. Pricing your home properly is 80% of a good marketing plan!
Overpricing the property to leave room for negotiations is a common seller mistake as Kyle points out. Home buyers have access to a ton of information today and generally have a good handle on what a house is worth. Who will a seller negotiate with if buyers are not even looking at the home because it is priced to high?
Another seller mistake is thinking you have all the time in the world to sell and a buyer will come along. An over priced home will sit on the market unsold. If it sits long enough it becomes stigmitized and buyers shy away.
Greg Hancock, West Chester Ohio REALTOR- Pricing Your Home Correctly
Greg’s article, Pricing Your Home Correctly, discusses three key aspects in getting the most for your home.
Greg points out that a home that is move in ready will get higher offers than ones buyers perceive as needing work or updating. There are a multitude of links showing home staging can increase your homes value when it comes time to sell if not appeal.
Finally, marketing is key to getting your home sold. Gone are the days of snapping a few photos and listing in the MLS. Quality real estate photos are needed to leverage your home’s appeal and interest across the internet.
The Take Away of Pricing Your Home Correctly
As stated in the beginning of the article there is nothing more important than pricing your home right for the market. I believe each of these top REALTORS re-iterates that in their articles on pricing.
Pricing your home right from the get go will ultimately put more money in your pocket and certainly create less hassle for you. Pricing effects the time your house is on the market. Too long and home buyers start to question what is wrong with your house an phenomenon I call market rot. All a buyer sees is a home rotting like a banana left uneaten for too long.
Your homes price is not based on the Zillow Zestimate or your towns tax assessment or what your neighbor thinks. The only way to correctly price your home is a Comparable Market Analysis from an experienced real estate agent.
How You Price Your Home Directly Relates to The Showings and Activity You See
First look at home buyers search for home. If you have been in the market to buy a home where do you turn? The internet. A buyer who is just starting their search will hit a large national site or a local REALTORS site to see the available inventory. Often they end up working with one agent and that agent notifies them daily based on the home buyers criteria…. which is usually price with some amenities.
The graph shows the relationship of the amount of activity you will received based on the how the house is priced. Priced to high you will have very little, if any activity. Priced at fair market value (FMV) you will get an acceptable amount of activity. Priced below and you will get flooded with activity.
Finally two final thoughts to consider when pricing your home right for the current real estate market.
Exposing to The Wrong Buyers
Price too high and there is a good chance if you are getting activity, you are showing to the wrong buyer.
Most likely your home does not compete with properly priced home in that price bracket. For example, your home’s FMV is around 550k but you decide it is worth 650k. Your home is going to be lacking in size, bedroom count, bathroom count, finish etc…. You may get activity but no offers because your house is quickly discounted by buyers either on the internet or quickly upon a showing. It just doesn’t compete with other homes in that price bracket.
The Relationship of Days on Market and Activity
As Bill Gassett points out, the longer your house sits on the market the more leery buyers get of your home. It is important to get your house sold in the first 45 days or so and even better if it is in the first 30 days. You most likely get the best price for your house because buyer excitement is high then.
Your house hits the market and peak activity will occur in the first 7 to 8 weeks usually around week 2, 3, or 4 if it is priced right around FMV.
Now this is key. The first buyers thru your house are going to usually be working with agents and have been out in the market place looking with an agent. These are your best buyers. Most of them have been out in the market place and have rejected every other home and are waiting for the next new house to come on. These buyers have may have lost a few offers for underbidding or maybe home inspection or they have been out there and not finding what they want. These are the buyers that have felt the most pain and are ready to structure the best offers.
After the peak you will find every week that goes by you will probably be getting less and less activity. The buyer’s that call after a few months on the market are probably new to the market place and have not gone thru all the older inventory sitting on the market. Once they sort there way thru all the old inventory maybe lose an offer or two they start to wait for the next round of new inventory. Your home is used as a learning experience.
When it comes time to list your home there is nothing more important than pricing it right. Take the time to really understand how and why your home should be priced for the market place. It will save you a lot of time aggravation and even money!!
This article, Five Top REALTORS Around the Country Discuss Pricing Your Home Right, was provided by Kevin Vitali of EXIT Group One Real Estate. If you are thinking of selling your home call me at 978-360-0422.
Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest including the following communities and the surrounding areas, Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford