We do a LOT of blog posts on tips for sellers – just browse our seller’s blog archive – but I thought I could write one on tips from a different perspective. This post takes the perspective of home sellers that over-price their homes, and why that is such a bad idea.
If you have had your home listed for 2 weeks or more without an offer, nine times out of ten it’s because you are over-priced.
The temptation to over-price is strong. I get that. I meet a lot of potential home sellers who throw a number out for what they want to list at, and I ask them why. They always say the same thing: “I looked online, and I know that’s what it’s worth.” Unfortunately, no. Remember – your home isn’t worth what you think it’s worth…it’s worth whatever a buyer is willing to pay for it, period.
Over-pricing your home wastes your time and your Realtor’s time. Our best shot at getting your home sold quickly is on the first impression. And that first impression happens when your home hits the MLS for the first time. If it’s over-priced, Realtors won’t even offer it as an option to their buyers. They just won’t even bother with it.
Also, buyers are savvy these days, just as savvy as you think you are! So if you can get to Zillow, so can they. You’re not fooling anyone by over-pricing; you are only fooling yourself.
Over-pricing at the get-go sets you up for failure later. Even if you get a contract on your over-priced home, it commonly comes back to bite you in the rear later. Here’s why: your home probably won’t appraise at the contract price.
Most buyers finance their purchase, and banks will only lend up to the appraised value. Buyers typically back out of the deal, because they don’t have the cash required to make up for the difference between the appraised value and the contract price. And, they are allowed to, if the buyer’s Realtor was smart and included a financing contingency (almost all contracts do.)
Over-pricing your home gives buyer’s agents the upper hand when you price drop. A price drop is inherently a good thing. When you price drop, you open your home to a new pool of buyers whose pricing criteria you now match on the drop. The downside to a price drop is that good buyers agents now have the upper hand in the negotiations. They (should) know that you are dropping the price because you’ve had no activity (or at least no contract.)
That makes you a more “desperate” seller, and they will treat you that way.
Over-pricing your home is a bad idea. Price it right, and you’ll sell it pretty much right away, so long as you follow all of our advice and recommendations. And by the way, after commissions, closing costs, and taxes, that $20,000 over-market price you insisted on adding to the listing price above the market value barely moves the mark on your bottom line for the median-priced home (about $325,000.) Literally, it comes out to maybe an extra $2,500, if it were to ever close. So it’s just not worth it anyway.
Just get with our Realtors from the start, and follow our pricing recommendations and listing advice. Call us at 561-500-LIST (5478)!