Is Your Property Priced Right?
Keeping up with the market is critical to the success of any sale. In a market where a greater number of sellers are competing for fewer buyers -- a buyer's market -- homes that have asking prices even a few dollars too high can go unsold for months, or worse.
Choosing the right real estate agent to market your home, an experienced agent who's not afraid to tell you everything, will result in: 1) having a source you can trust for accurate information, up-to-date comparative sales stats, pricing guidance and advice, 2) a successful sale AND, more importantly, 3) a problem-free closing. A good agent provides all the facts necessary to help you avoid the worst mistake you can make -- overpricing.
Some sellers price incorrectly because they list with the agent who quotes them the highest asking price. With some highly optimistic agents this may be an honest one-time
mistake. With others, it is a practice insiders call "Buying the Listing," and will
cost you valuable time and a whole lot more.
What Happens When You Ask Too
Buyers are not fooled
Remember how quickly you learned back when you were looking to buy
the house you're now trying to sell? All buyers do. Buyers see a lot of homes in their price range (10 to 12 homes on average) before they're
comfortable with making an offer. They
compare price, features, location and condition of the homes they
inspect. The internet helps them
become "expert" within hours.
You're helping other
If your home is priced too high, it will not
compare favorably with other homes in that price range. Simply put, other homes will have more to offer for the
same amount of money. In fact, you're over-priced home is helping
agents to sell other houses. If you're getting lots of showings but no
offers, that's what's happening.
Your home will not
appraise at your asking price
Most buyers require mortgage financing, which means an appraisal will
be required by the lender. Appraisers look at similar homes in your
area that have sold in the last six months. No matter how much
you love your house, the appraiser will not see it with the same
nostalgia. If you price your house, say, at $100,000 but it is worth only
$80,000, banks will not lend anyone the money. Even if the buyer
wants to pay $100,000, he or she can't complete the transaction.
The bank will not OK the loan. You may have wasted months learning
Appraisers Are Being Watched
Government and private mortgage insurance companies are cracking down, making sure appraisals are not over inflated.
Pricing Yourself Out Of The Market
After three months at your too-high price, and no action, your
real estate agent persuades you to lower the price. By this time your
house is no longer a fresh, hot new listing. Buyers who might
otherwise have been excited to buy your home have purchased other
properties -- an important statistic to remember -- 98% of serious and
qualified buyers who look at homes through Realtors eventually DO buy
something. New buyers talk, to other agents, to neighbors: "How long has
that house been on the market? ...what's wrong with it?" Rumors
grow. They'll imagine all kinds of flaws other buyers saw that made them pass it up. After three more months you lower your price again. Eventually a bargain
hunter offers you bottom dollar. There are statistics, including
psychological, to back this up.
You lose time, or worse
Backed against the wall sellers
in "down" markets have often failed to cut their losses, or worse, lost their home to foreclosure, simply because they waited too long
to face the pricing issue, or failed to trust their agent.
Is it OK to sell for
In some cases when you move 'up' you can
profit in an expensive housing market.
Example -- let's say the market is down
10% -- both your house AND the bigger house you want to buy are effected the same. They're both down 10%.
Which means that if you sell a $100,000 house for $90,000 you are in a position to buy a $200,000 house for $180,000. No matter how you look at it, you made $10,000.
You might even do better.
Remember that in a recession, sellers of the more expensive homes
generally have a harder time selling and are anxious to look at all
offers. Donald Trump has made fortunes moving up in "down" markets.