Overpricing your home can cause missed sales and longer market time
Dear Reader -
Kate McQueen, REALTOR® from the Houston Bay area in Texas, outlines the problems that result when a Homeowner insists on over-pricing a home up for sale and the Listing Agent "caves in" to secure the Listing.
Kate (click her name for her profile) lists many issues resulting from over-pricing and explains them in detail. I took notes as I read her post the first time!
Enjoy learning from Kate's post - whether you are an agent or a homeowner!
Have a successful day,
Lynn
PS Just in case I haven’t thanked you personally, I really appreciate every time you stop by to read and/or comment on my posts. L.
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Most every homeowner preparing to put their home on the market has concerns about under pricing, and ultimately walking away with less than they could have. It's a reasonable concern and one that your real estate agent should adequately address.
Real estate agents utilize MLS market data and pricing analysis software, along with their own knowledge of recent home sales in your area, to determine what your home will likely sell for and expected market time. No one has a crystal ball, but this approach is the most reliable in determining what the final sale price might be and the starting point for listing your home.
It's important to keep in mind that this data is subjective since your agent may have many recent sales
for making the comparison, or very few. However, a skilled agent knows how to analyze the data at hand to determine the appropriate comparables and market patterns. The MLS will tell the story, but your agent must have an understanding of your area in order to make the most informed recommendation for pricing.
What can happen when your home is overpriced
When an agent representing a buyer is preparing to make an offer, they will do the same thing your listing agent did in determining the list price. They will analyze MLS data along with their own knowledge and experience of home sales to determine a fair offer amount. If they can't find the rationale for your price, the buyers may decide to offer on a competing home that is priced closer to market value. Many buyers will refuse to enter into a situation that means they may be faced with paying more than the home is worth, or canceling the contract and walking away from the time and money they've invested by entering into a purchase contract with you.
Remember, if your home doesn't appraise at or above contract price, the buyer has the right to walk away and retain their earnest money deposit. If the appraisal value comes in less than the contract, it leaves you with three alternatives. Lowering the contract price to meet the appraised value, asking the buyer to increase the contract price, or putting your home back on the market hoping that someone will pay your price. Few buyers are willing to shell out the extra cash and pay more than the market and appraisal says the home is worth, since the money has to come from their pocket at the closing table, whether they are paying cash or mortgaging the home.
Longer market time can cost you
The longer your home is on the market, the more you will invest in mortgage payments (if any), maintenance, and property taxes. Not to mention the time you spend keeping your home in showing condition and dinners out during showings. And why did you want to sell in the first place? Are you transferring out of the area or needing to buy up or downsize? If your home is priced above market, it can decrease your bank account and delay your plans.
Days on market sends a message
When buyers and their agents are searching the internet and MLS for homes to view, they often consider days on market as an indicator of pricing and condition. If your home is on the market for longer than average for your area, it sends a negative message before the buyer has even seen the home. This translates to fewer showings and a decreasing buyer pool. And when you finally get an offer, it will often be less than your asking price.
The best practice is to discuss your listing price in-depth with your agent. Have your agent present the data and rationale for their recommended price. It's important to start off on the right foot with the right price. In some markets, starting at market price can mean multiple offers. Oftentimes at least one of those offers will be above your asking price, depending on how competitive the situation is. That's the position that every seller should strive to be in.
To learn more, request a no obligation consultation at What's My Home Worth?.
photo courtesy of Stuart Miles freedigitalphotos.net
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