Awhile back Brian Block wrote a great post A Guaranteed Way to Lose $54,528 When You Sell Your Home. What Brian showed in that post is how overpricing your home will cost you money and guarantees that you will get less than if you had priced it competitively from the start. The post contains a great analysis of why this happens and I won’t try to improve upon it here. I will, however, provide you with the latest data from the Lake Country area located in Waukesha County in Wisconsin.
Here is an example for the $300,000 - $400,000 price range from 1.1.09 - 6.30.09. Homes that took over 60 days to sell did average a price of $3,812 more than homes that sold in less than 60 days ($349,918 vs. $346,106.) However, it took them on average 185 days longer to sell their home (219 days vs. 34 days.) Most sellers would agree that the cost of waiting an extra 6 months more than outweighed the extra $3,812 they received at the closing table.
Note that these statistics take into account the original list price of the property. Here's an example:
Let's say a property was listed three times right in a row:
- Listed for 6 months with an original list price of $400,000
- Listed for 6 more months with a list price of $360,000
- Listed for 2 months before selling with a list price of $340,000 and a sold price of $330,000.
Often times the MLS will only show that home as having 60 days on the market and a list to sale price ratio of 97%. The actual days on market was over 420 and the list to sale price ratio was 82.5%.
If you are thinking of selling your home, it's imperative that you seriously consider what overpricing your home and testing the market can do to your eventual selling price. Make sure that you understand where the numbers are coming from that your agent is providing to you.
If your home falls into a different price range, feel free to contact me and I will provide the statistics to you for that price range.