DANGER, DANGER: DON'T OVERPRICE YOUR HOME!!
Okay, you've decided to sell…but for how much. Yeah, you want to make as much money as possible but beware…don't overprice it could cost you in the long run! How you ask?
Top Problems of Overpricing
Limiting prospective buyers – Buyers usually know their price range and most buyers and their agents don't search out of the price range they can afford.
Miss out on the big splash – Homes get the most traffic in the first 30 days. So if you price high, planning to drop later you will lose out on the initial demand…and once it's gone…no price reduction will duplicate that new listing potential.
Attracting the wrong buyers –Buyers have some idea the type of house their money will buy. To illustrate this point let me ask you, would you buy Geo Metro for the price of a BMW….well neither will the potential homebuyer.
Delay, Delay, Delay – By overpricing your house you are wasting your time and money….it may cost you more in mortgage payments to start at a higher price and leave your house on the market for a long period of time….and you may end up selling for less after price reductions. Plus, you may need to move and ultimately be stuck with two payments waiting for that high price.
Mortgage Turn Downs – Overpriced houses will not appraise enough for a loan. No loan – No sale.
Raising Suspicions - The longer a house stays on the market the more potential buyers wonder – What is wrong with that house?
Could help sell your competition- Overpricing your house will only make properly priced homes look like more of a deal to most buyers.
- Realtors don't show your home - They will know the market and recognize that your house is overpriced. They want to SELL and their buyers want a good price, so they have no motivation to show your home….especially in today's market when there is plenty to show.
Pricing to Sell
Don't start out by stating what you want….you or your realtor do not set the price it is set by one thing ….what a buyer is willing to pay. So, how do you determine what a buyer will pay?
Market Research – Before setting a price, you need to know the market. No one knows that better than Realtors. So speak with three realtors before choosing one. DO NOT pick a realtor just because they suggested the highest price. Rather examine the data they used to provide the suggested price….this should be comparable sales pending and expired listings they provide. Comparable sales are the most important because these will show what houses like yours have sold for recently…remember to check and make sure they are comparing houses that are like yours. Once you have inspected the data you should know which Realtors are giving you the most accurate value. There are of course many factors that go into choosing a realtor but the price suggested should not be the only one. Many agents price high just to get the listing but this doesn't sell your home the fastest and may hurt you in the long run.
Remain Objective - Buyers do not have the memories and time vested in your home. Plus, they see the scuff marks, overcrowded closets, stains on the walls and ceiling that you don't notice anymore. Price on what's there not on what you feel.
- Visit other houses – Visit other houses on the market. Compare what your house has to each of them and price accordingly. Also, this may give you tips on what to do or not to do when preparing your house for showings.
So, in a nut shell don't sell for what you want, what someone tells you or what your neighbor is asking for their house…..do the research and price for the market. If you notice there is little to no interest, be flexible in dropping the price. Pricing a home is not an exact science, only you can determine the price….after all only you can know what you owe on your mortgage and you know your house better than anyone…so have experts help with the research and then come up with a price that both you and a buyer can live with.
Feel free to share more tips on how to price a house to sell.