Tip for Sellers in a Hot Market: The Right Price Still Matters
When inventory is as low as it is across the nation, home sellers become more powerful. But they’re not all powerful, a caution we’d like to offer with this blog post. Smart pricing still sells home faster than unrealistic pricing, and that’s where your Realtor® comes in.
With less competition for your home, you may be tempted to inflate the asking price. And who can blame you- stories of bidding wars and desperate homebuyers have been all over the news. But a bidding war is much less likely to happen if your home starts at a price that doesn’t make sense. And if your home sits too long, it could actually lose value—at least in the eyes of buyers.
The Price is Right?
Sellers often have a price in mind. It may be a price they need for monetary reasons, or one that’s based in emotion, as in “I know my house is worth this much to me, so it must be to buyers as well.” They may also be thinking of former years when homes fetched more than they do in today’s market, or get fixated on that a neighbor sold his house for. But none of those factors, except maybe what the neighbor got for his house, have much to do with how buyers assess home value.
Say you decide on a price for personal reasons; maybe you dig you heels in and ignore advice from an experienced real estate agent who understands the current local market from a logical, non-emotional perspective. You say “Let’s try my price for a week or two and see what happens.” So you go ahead and list, host open homes, and before you know it, 30 days have gone by without an offer. Then 45. Then 60. Now you have to consider: reduce the price? Pull it and re-list? Let it sit some more? No matter which option you choose at this point, your home is at a disadvantage compared to fresher listings.
3 Major Dangers of Over-Pricing a Home
1) You lose the buzz of a “new listing.” Research confirms that interest and activity surrounding a home for sale peaks in the first 30 days. After that, prospective buyers wonder why your home hasn’t sold, leery there’s something wrong with it. Stale listings and price reductions may scare off potential homebuyers.
2) You lose the best qualified buyers. Today’s buyers know what they can afford- they’ve been thoroughly vetted by lenders and bring their pre-approval letters with them when they tour homes. They won’t even visit an over-priced home because they know they can’t afford it. Yet these are the people who are most qualified to close escrow on a home.
3) You help other people sell their homes instead of selling your own. If you over-price your home, comparative properties (known as “comps”) that are more realistically priced become all the more attractive to buyers. Other Realtors ®, who study comps religiously, may even use your home to demonstrate the value of other properties.
Realtor ® as Advisor
A good agent won’t try to buy your business by suggesting an unrealistic price. Look for Realtors® willing and able to tell you the true market value of your home, and try—though it may be painful—to truly consider their advice when you price your home.
Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in theSan Francisco Bay AreaandPacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert.