Selling your home can be one of the most daunting tasks home owners face and pricing your home properly is by far the biggest and most impactful decisions in that process. An overpriced home is one that is destined to linger for a prolonged period and then be subject to a much lower sales price than if it had been properly priced to begin with.
I often get the question from sellers that have overpriced homes about buyers that may have visited the home “if they think it’s overpriced, then why don’t they just make an offer”?
Great question and some of the answers are discussed in the body of this blog below-but in the simpliest terms, it’s just too difficult. When you think of a buyer having to obtain a loan, search for homes, juggle time between job, children and seeing property and then try and negotiate with a seller that clearly does not understand the market, it becomes a task most buyers just don’t want to deal with.
This blog might seem like a little bit of “tough love” for sellers but it needs to be said.
Home prices are starting to inch up again in most areas, which is encouraging sellers to believe that their homes will sell quickly and for more money. And that’s when they start making mistakes. Don’t be one of them.
Overpricing a home is the biggest mistake a seller can make. Asking a high price for your home says more about you than it does about your home. It may show you value your investment, that you have cared for the home and kept it updated and in good repair. But if the price is too high compared to other similar homes, it can make you appear unrealistic.
Buyers shop in a range that they’ve either been given by their lenders or one where they feel comfortable. If they’re searching on the MLS or a major search engine (Zillow, Trulia etc) they will typically look at homes they can afford and may miss seeing the page where your home is advertised because it’s out of their price range.
It’s also psychologically easier for buyers to negotiate in their price target range. Buyers feel more comfortable asking for a little discount on a home within their reach than to ask you for a big discount on a more expensive home.
You won’t get the more affluent buyer either. Buyers who can afford to pay the price of your home will simply compare your home to others in the same range. They will quickly find out that other homes have better locations, more square footage and snazzier finishes than yours and for the same price.
You’ll find your home will get few showings and if you get any offers at all, they will be low. To get traffic to your home, you’ll have to lower the price. You may find that offers still aren’t coming, even though your home is now fairly priced for its location, amenities and condition.
Why wouldn’t buyers jump at a price reduction? First impressions count, and you didn’t make a good one. The first impression the market had of your home was that it’s overpriced. An overpriced home is a reflection of the seller, not of the home.
Other agents and their buyers don’t want to deal with a seller who is unrealistic. They may have already jumped to conclusions about you and your home that are more negative than you deserve. You’ve overpriced your home because you’re unreasonable, greedy, out of touch with current market conditions, or you’re heavily in debt, upside down on your mortgage, or otherwise in some sort of trouble.
A wounded seller tends to bring out the predator in buyers. Often, homes that have been repriced attract lower offers than other similar homes in the same price range. Buyers think you’re desperate, so they may offer less than market value hoping you’re strapped enough to take it.
It’s far better to make a good first impression on the market — that your home is offered at a fair price because you’re a reasonable seller who understands your home’s value and current market conditions.
Keep in mind that a home will never sell for more than a willing buyer will pay for it, or that a willing bank will finance. You’re always better off pricing your home so that you can get as close to 100% of your asking price as possible.
Only then, will your home sell quickly and for more money.
Thanks to Blanche Evans for her contribution to this blog.