Are you planning to sell your home in the near future? There are several strategies that agents may suggest. I would venture to say that none of those strategies include overpricing the home. Not in today’s market.
When real estate agents meet with sellers to discuss pricing, they most likely will hear the sellers repeat what in reality are MYTHS.
- Upon hearing the agent’s recommended price, the seller will up the price by $5,000 “just to allow for the buyer to offer a lower price“ which the buyer will certainly do because the price is $5,000 too high.
- The seller will want to price the home based on the “amount they need to buy their next home“. Do you think the buyers will say, “oh, the sellers need such-&-such price, so we’ll gladly overpay for the home because we love it so much.” Not gonna happen!
- The seller will want the price to cover dollar-for-dollar the cost of routine maintenance. That $1000 repair to your roof isn’t an “upgrade”. It merely means your roof doesn’t leak anymore.
- The seller believes their home to be better than Joe’s home down the street and thus should be higher priced than Joe’s. Never mind that Joe’s has upgraded cabinets & counters, hardwood floors (not worn carpet), fresh paint, and no pet-scratched woodwork.
Let’s suppose your home is in a cookie-cutter subdivision. Except for condition or location, there may not be substantial differences to the homes other than floor plans. The buyer may have targeted a specific subdivision or area that they want to live in.
The buyers likely have viewed all the homes that are already on the market and for one reason or another, have decided against those homes. They could have decided against the decorating style, the lack of upgrades, the condition, or the location. Whatever the reason, the buyers have, as we say, “VOTED WITH THEIR FEET“. Although not verbalized, the buyer has effectively said that they are not willing to pay the price the seller is asking for the home.
Now what do you think will happen when a new listing goes on the market at a price lower than the others. (I know this is a “DUH” moment, but bear with me.) The buyer that has been searching, will know that this lower priced home represents a better value. If the price is substantially lower, the buyer may be concerned that other buyers just like them, will also see the value and try to snap it up. This eagerness can lead the buyer to make a full priced offer. If there’s an inkling that other buyers are considering the home as well, the buyer may decide to pay a little over list price to ensure the seller “picks them”. So the seller that UNDERPRICES their home, can actually achieve a higher price than similar homes will ultimately achieve as they sit on the market.* Of course, there are caveats to this strategy, so your agent is the best person to advise whether it will work for YOUR home.
The next scenario is one we deal with all to often now – that of the unkempt neighbor next door. With short-sales, foreclosures and just the tight economy, the neighbor’s home may not present good curb appeal for the neighborhood. When pricing your home you can’t ignore the neighbor’s home no matter how spectacular YOUR home is. While it is unfortunate, you will need to look at your home and your neighborhood through the objective eyes of a potential buyer. Price it accordingly and objectively.
Agents used to say that if the home had been on the market 30 days without an offer, then the price was too high. In today’s world with fewer buyers that might be stretched to 60 days. Some listing agents are getting pre-agreed-to price reductions at the time they list the home. Remember, the buyer has the final say as to what a home is worth.
* Barbara Corcoran, Realtor® and NBC Today Show contributor, has recommended pricing 10% below the market to set the stage for this situation to occur.
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