|
This is bad news! The problem is, too many people selling their homes do it!
Many times, a seller will insist that their home is worth a certain amount. The seller will interview several brokers and will usually choose the one who gives them the highest listing price and/or the price the seller insisted the house was worth.
Sellers be aware... Buyers educate themselves with Market Comparables or "comps". These "comps" consist of properties, which have recently sold within the past 6 months and that are similar in criteria to the home they are interested in. Along with educating themselves, buyers usually use an agent that specializes in Buyer Representation. This "Buyer's Specialist" knows today's Market Trends and is very familiar with area "Comps", including those of lengthy market exposure.
Moving on...
Let's say that, "Agent X lists your home for $375,000" when other homes in your neighborhood, with similar criteria, have recently sold for around $335,000. The home shows a few times, but not as much as you thought it should. Your first thought is going to be, What is my agent doing about this? and Why is it not showing? Next, you'll question your agent about the marketing of your home...etc.
Sellers listen...
Informed Buyers who can afford the inflated amount know the "comps". These Buyers see much more value in homes that have your homes similar criteria, but that are priced the way they should be,"realistic and competetive".
Keep in mind... if your property is overpriced, as determined by the comps, more than not, it will not sell. Overpricing lengthens marketing time. Which means properties left on the market for an extended period of time become "shopworn" or "stale".
Ok, so now what?
You've overpriced your home and need to move. You'll need to drop the price, maybe once, twice...or even more. Know that by this time you will never be able to recapture that flurry of initial activity you would have had with a "realistic" price, as your house is now "stale". It will take longer to sell and worst case scenerio you could have missed the peak buying season altogether.
To the informed buyer, your home is now one of the "leftovers". The informed buyer more than likely moved on and purchased a "realistically" priced home.
To the uninformed buyer, who may have bought your home at an above market price...
Your buyer will need a mortgage, the mortgage lender will require an appraisal. If comparable sales for the last six months and current market trends do not support your sales price, the house won’t appraise and your deal falls apart. Of course, you could always attempt to re-negotiate the price, but only if the buyer is willing to listen.
If they don't listen and your home goes back on the market, potential buyers will make lower offers, as they will see your desperation.
By overpricing your home, you will more than likely end up with less money than if you had priced it right from the beginning.
The hard news... if you start out with a high sales price, then drop it later -- your house is "old news."
Plain and Simple...
When you list your home for sale, be sure that you see and understand the "comps" for your neighborhood. Remember, buyers know roughly what your house should sell for (so should you).
Price your property appropriately from the beginning and chances are that you will have a timely sale at the highest possible price and that is great news.
|