When you list your home, you need to understand how important having the correct price is. You list your home to sell it not so it sits on the market for months or never sells at all!
Right now is a great time to sell your home because there is strong demand and a limited supply of homes for sale. The latest NAR Existing Home Sales Report said there is only a 4 month supply of homes for sale.
You will find the low inventory issue is affecting many areas of the country. There is strong or very strong home buyer traffic according to the April 2018 survey of Realtors.
The law of supply and demand is a basic principle of economics. Today, the supply of homes is low but the demand for homes is high.
The means anyone selling a home will find they are able to get the best price in a shorter time. Well, that is true IF the seller selects the correct price for their home!
Overpricing your home is one of the worst things you can do when selling a home! If you want to sell your home and not just list your home, read on!
Why You Should Not Overprice Your Home
Overpricing Leads to Invisibility
If you overprice your house, it means you are competing with homes that are worth more than yours. Such as homes that are larger or have a better location or more features that buyers want today.
Buyers will see your home’s price and think that the listing agent and the seller are either insane or doing drugs.
Or maybe both…
A mouse click or swipe on their phone and they have moved on to a home that is NOT overpriced. The right price ensures your home is seen by every buyer looking for a home like yours.
Emotions and Home Selling
Being emotional regarding the property can result in overpricing and many other problems. It can possibly mean you dismiss your Realtor ’s advice about repairs or preparing your home for showings.
You have to keep the emotions under control and think logically when selling real estate. People often think their house is better than every other property for sale.
Your home is not worth more because of your feelings or emotions! Your home’s market value depends on what similar homes have sold for recently in the surrounding area.
The Price You Need
Buyers do not care if you must have a specific amount to afford your next home. You must price your home based on current local market conditions and not what you want or need to get.
I understand that you have to get a certain amount of money for your home. Home buyers will not care about what you need to get when your home sells.
Home buyers care about getting a good deal on a property that fits their budget, needs and wants! Not about what you want, need or how much you need to buy your next home!
But the Zestimate Is
Many people think that they can get the value of their home from a website such as Zillow. As much as I love technology and the internet, this simply is not true!
Zillow’s algorithm cannot handle making adjustments such as different location, condition, etc. Pricing a home goes beyond comparing the square footage and number of bedrooms.
Check out what the ZIllow CEO Spencer Rascoff said:
We call it a Zestimate and not a zeppraisal and not a zeprice. It’s meant to be a starting point. To determine a more accurate opinion of a home’s value you should hire a real-estate agent, or more to the point, you should sell the house and then you will know how much it’s worth.
Rascoff learned his lesson after selling his home for 40% less than the Zestimate. How would you feel if this was your home?
If the Zestimate is lower than what a local experienced Realtor recommends, would you insist on lowering your price? Would you insist that the list price must be higher if Zillow thinks your home is worth more than a local Realtor?
Buyers Like Large Rooms Not Room to Negotiate
Room to negotiate is the main reason that sellers will want to overprice their home. Sellers think negotiating room will help them get more money but this rarely works!
In today’s market, buyers are willing to pay asking price. Sometimes, buyers will pay more than the list price if there are multiple offers.
But it is very very rare to find a buyer willing to pay more than what a home is worth. And even if you find a sucker, I mean buyer, your home must still appraise!
If the buyer is using a mortgage, then the bank will require an appraisal. Appraisers give an unbiased, unemotional opinion of the current market value of your home.
If the appraisal comes back lower than the contract price, the bank won’t normally give the buyer a mortgage. This can mean the home sale falls through and your home must go back on the market.
Yesterday Is Not Today
Pricing your home based on what you paid is not how to select the asking price. What you paid could be significantly different from today’s market value!
This is because the real estate market is constantly changing. The current market value of your home cannot be ignored!
Home prices normally go up but we all learned painful lessons from the Great Recession. Thankfully, most home values have recovered from the crash.
If you bought right before the crash, you may find the value of your home has not increased much. If you bought at the bottom, you may be pleasantly surprised.
If you ask too much, your house will sit without much activity. Or it will not get any lookers or inquiries at all!
An overpriced home will become stagnant when it does not sell. If a home sits on the market for a long time it can cause buyers to avoid it.
A property that stays on the market for a long time is looked at with skepticism. Agents and buyers start thinking the home has a problem.
The Take Away