We were recently given some Cedar Rapids area statistics that proved a point that most agents try to convey to their sellers. This data makes the argument very clear about what happens when you price your home correctly, versus pricing it high and bring the price down over time (a fairly popular way to do things)
I believe this data should be the first thing a seller looks at during a listing presentation. The data is THAT VALUABLE!
Two sets of homes were compared for this analysis. Group 1 was homes that sold in the past 365 days that did not drop their price. In other words, somebody came and bought the home before the owners had a chance to do that. The owners "priced the home to sell."
Group two is the group of homes that sold in the past 365 days after having at least one price drop. These homes started higher on average than the homes in group 1, but did they sell for more???
The answer is NO! This is a huge point, so I will type it again. The homes priced lower to begin with, SOLD FOR MORE, than other homes that started higher and had to come down in price.
This is counter intuitive thinking, which tells you to start high to end up in a better place. The facts do not back that up. Here is a breakdown of what that looked like over the past 365 days.
Homes between $100,000 and $200,00:
No price reductions, original list price on average was $153,794 and those homes sold on average for 97.2% of list price, or $149,545. It took an average of 50 days to sell those homes.
One of more reductions, original list price of $163,297, those homes sold on average for only 91.1% of list price! Or, $148,685!
Now don't miss the key point here. The homes that were listed about $10,000 less than those listed higher and then reduced, sold for MORE MONEY! $149,545 vs. $148,685.
This is the proof that pricing a home higher got the owner nowhere. And to top that off, average days on market for the price reduced homes was 167!!! That is 117 more days than homes that were priced right to begin with.
Don't forget about mortgage payments, taxes, and utilitiy costs lost. Maybe even a low interest rate was lost. (Can they get any lower now?)
This pattern holds true for all price ranges, not just this one.
The facts do not lie. Overpricing your home in hopes of getting more money for it, does you no good. You stand to make LESS, and spend a lot more time doing it!
I hope this changes a few opinions on pricing strategy if you are thinking about selling. Please pass this along to anyone you know who is thinking about selling their home. This is valuable information.
If you have any questions or need any real estate help, please contact us.
Comments(0)