In today’s real estate market price is everything, it is important to hire an experienced real estate professional who is seasoned enough to not only intelligently help you determine what your home is worth but also brave enough to be straight forward and honest with you about the value of your home. Let’s face it most of you, before you call an agent probably have a pretty good idea of what you think your home might be worth and being the savvy home seller you are, you may call a few agents that you either got advertisements from or perhaps you got a referral from a friend. Each of the agents you speak with prepares a "Competitive Market Analysis" that suggests a specific sales price. In reviewing them you may be surprised at some of them because possibly one of them may be lower than you expected. Even though they back up their suggested price with recent sales data of similar homes, you remain convinced your house is worth more, so you choose the agent with the price that is closer to what you think your home is worth. Most people are inclined to pick the one that gives them the highest estimated sales price. After all, it seems like they care about putting the most money in your pocket. They are willing to start out at your price and use the philosophy that you can drop the price later, this seems to make sense right? The truth is that, most likely, they are quite doubtful that your home will actually sell at that price and the intention from the beginning is to eventually talk you into lowering the price. This way they get the listing first, then worry about price later.
This can be a deadly mistake; you see the truth is, if you start out too high on your home, you've probably succeeded in adding to your stress level . . . not good. There are a lot of things behind the scenes that take place while trying to sell your home; you don't want to add any more to it that you have to. The listing agent isn't typically the one to sell your home to a buyer. They primarily market and promote your home to all the local agents who have buyers. These agents also do market comparables for their buyers and as it turns out if you've overpriced your home, fewer agents will bring their buyers to view it. It is an agent’s job to know the local market and home values. If your house is priced high above market, they won't want to waste their time. Their time is better spent showing homes that are priced realistically. When you decide to drop your price later, your house is "old news" and you can't recapture that flurry of initial activity you would have had with a realistic price, causing your house to take longer to sell and potentially for a much lower price than if priced correctly in the first place.
So let's say you do get a buyer to make and offer and contract on your house. They will need a mortgage, and the lender requires an appraisal. If comparable sales over the last six months to a year don't support the contracted price, the house won’t appraise and your deal falls apart. You can always attempt to renegotiate the price, but only if the buyer is willing too as well, if they don’t, your house will likely end up back on the market. This presents another stigma because once a home has been off the market and put back on again, it is harder to get a good offer. It causes potential buyers to think you could be getting desperate, so they make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received. In today’s market there are other obstacles that cause a home to stay on the market longer, such as, the price point your neighborhood is in, and the fact that lenders are being more cautious, so pricing it right from the beginning is more critical than ever. Find an agent that you feel is experienced and uses more than just a standard market analysis in helping you determine your home’s value. Thinking of selling? Feel free to visit my seller’s page and fill out a market analysis form, we will be glad to review your pricing and selling options.
Robyn Heathcock
IRG Real Estate, LLC.
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