DANGER, DANGER: DON'T OVERPRICE YOUR HOME!!

By
Real Estate Broker/Owner with State Wide Realty Co.
https://activerain.com/droplet/5jQN

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.

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Re-Blogged 6 times:

Re-Blogged By Re-Blogged At
  1. Kate Reilly Lund 01/16/2011 02:55 AM
  2. Pam Dent 01/16/2011 04:52 AM
  3. Brigita McKelvie, Associate Broker 01/17/2011 01:28 AM
  4. Bill Burchard 01/17/2011 01:34 AM
  5. Roy Kelley 01/17/2011 10:51 PM
  6. Gabrielle Kamahele Rhind 01/17/2011 11:09 PM
Topic:
Home Selling
Groups:
Realtors®
VIRGINIA
Out Of The Box!
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Tags:
advice for sellers
price a home to sell
south central virginia real estate

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Rainmaker
147,409
Krista Lombardi
Prudential Calfornia Realty - San Diego, CA
It should be the Golden Rule of real estate:) Thanks for the post.
Jan 16, 2011 02:53 AM #1
Rainer
33,544
Kate Reilly Lund
RE/MAX Diamond, Realtors - Edison, NJ

Outstanding!

May I reblog this? I want others to know that other realtors think the way I do?

Katie the Real Estate Lady

http://kreillylund.remax-nj.com

 

Jan 16, 2011 02:53 AM #2
Rainmaker
425,963
Larry Atkins
State Wide Realty Co. - Farmville, VA

Krista - It definitely should be. Thanks for stopping by.

Katie - By all means, reblogging is a great compliment and helps us spread the word to other readers.

Jan 16, 2011 02:56 AM #3
Ambassador
1,154,678
Bryan Robertson
Los Altos, CA

Great article!  I wrote a couple of posts a few days ago talking about the pros and cons of overpriced listings.  The biggest con is your first point, the seller misses the buyer pool.  I can sell a house in a week if it's priced right but overpriced (had one substantially so) and it took nearly 2 years.

Jan 16, 2011 03:05 AM #4
Ambassador
522,951
Pam Dent
Gayle Harvey Real Estate, Inc. - Charlottesville, VA
REALTOR® - Charlottesville Virginia Homes / Horse

Larry - Excellent post clearly expaining the rationale behind pricing to sellers.

Jan 16, 2011 04:46 AM #5
Rainmaker
1,251,614
Michele Cadogan-Cell 917-861-9166
Fillmore Real Estate 2990 Av U, Bklyn , NY 11229 - Brooklyn, NY
Licensed Real Estate Associate Broker -

Larry- This is some great advise especially the reference to doing market research.  So home owners will often go with the agent that quote the highest price and then they are stuck waiting for a listing to expire because of no interest.  Sellers have to understand that its the banks/appraisers and the buyers (with offers)  that determine the actual market price.

Jan 16, 2011 06:09 AM #6
Rainmaker
425,963
Larry Atkins
State Wide Realty Co. - Farmville, VA

Bryan - Missing the "big splash" onto the market can hurt a seller more than usually realize.

Pam - Thanks, let's hope our potential sellers will take the advice.

Michele - That is true...and if they aren't waiting for it to expire, then they should at least expect the bait n' switch call for the reduced price at any moment.

Jan 16, 2011 10:53 AM #7
Rainmaker
939,428
Brigita McKelvie, Associate Broker
Cindy Stys Equestrian and Country Properties, Ltd. - Lehigh Valley, PA
The Broker with horse sense and no horsing around

Larry,

Great post!  This is exactly what sellers (and agents) need to know.  It's amazing how many agents will agree to the price the seller wishes to list.

Brigita

Jan 17, 2011 01:22 AM #8
Rainmaker
425,963
Larry Atkins
State Wide Realty Co. - Farmville, VA

Brigita - yes, then the homeowners get upset when they're asked for a price reduction.

Jan 17, 2011 01:33 AM #9
Rainmaker
785,019
Doug Dawes
Keller Williams Realty - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Great article Larry. I'd like to add something. If there are overpriced homes on the market it is because an agent either gave an inflated price or took the listing even though they knew it is overpriced. It can be hard to say no to a potential listing because we know that someone will put that property on the market overpriced. I am learning to walk away from those that insist on overpricing their property

Jan 17, 2011 01:44 AM #10
Rainmaker
564,104
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Hi Larry -- So true with everything you said, pricing is always the 900 lb. gorilla in the room and is the most sensitive subject for a seller.  It pays (on all fronts) to have a thorough and candid, yet respectful discussion on pricing, what will most likely occur if a seller adopts a certain position and flush out the scenarios so there aren't any surprises. It lends credibility and creates a better partnership, which is vital in general, but even more so in today's market.  Also, doing an immense amount of research to really know a market upside down is mandatory, and not something an agent always brings to bear.

Jan 17, 2011 03:06 AM #11
Rainmaker
5,463,183
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Very good advice for home sellers. Best wishes for continued success!

 The colors of winter in Maryland. Life is good in Montgomery County!

Jan 17, 2011 10:46 PM #12
Rainmaker
166,094
John McCarthy
Bean Group Portsmouth NH - North Hampton, NH
Realtor - Seacoast NH

Larry,

This is one of the best posts on correctly positioning a home for the market. I don't like to walk away from a high priced listing, but I would rather preserve my reputation than waste my time and the seller's too. Thank you for the great post.

Jan 17, 2011 11:01 PM #13
Rainmaker
861,200
Gabrielle Kamahele Rhind
KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ
Broker/Owner

GOOD MORNING LARRY!  Great post - and something that needs to be said and written about often!  --G

Jan 17, 2011 11:10 PM #14
Rainmaker
3,839,761
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Larry,

This post is outstanding! Clear, colorful, concise and right on the mark about over pricing!

Jan 17, 2011 11:20 PM #15
Rainmaker
420,748
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

Larry, 

So true.  It is much more DANGEROUS than sellers realize to way overprice a listing!  Buyers are way too sophisticated for that these days.  Not to mention the appraisers and buyer's agents. 

All the best, Michelle

Jan 18, 2011 03:12 AM #16
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Larry Atkins

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