A Seller’s Biggest Mistake When Putting a Home on the Market

A Seller’s Biggest Mistake When Putting a Home on the Market

In 38 years of selling real estate and thousands of closed transactions, there is one rule that I have learned (actually I have learned several more than that) and I want to share that with you today. By way of illustration, let’s suppose that you bought 500 shares of XYZ stock six years ago and paid $9 per share. Since that time the market has gone up and down and today that stock is selling at $6.75 per share. The owner of that stock doesn’t argue and insist on receiving what he paid for it; or that he needs to get $8 per share when he sells because that’s how much he needs in order to buy his boat, or car or pay for his kid’s college education. The market price of the stock is set by the market.

Putting a home on the market is the very same. The fair market value of your house is not dependent upon what you paid for it or what you need to get out of it. The price is set by the buyers out in the marketplace who purchase properties and by doing so establish the true market value of the home. Overpricing a home simply helps sell other homes that are properly priced because it shows that the owner is really out of touch with the market.

Eventually, and generally, those sellers reduce the price of their homes incrementally chasing the market downward and typically end up selling for less than they should have because, as every buyer knows, sellers will negotiate more when their property has been on the market a long time. Additionally, the seller has lost the very best buyers for their property. Let me explain that concept. Many times the very best buyers purchase homes within the 1st thirty days of the property coming on the market. This is because buyers shop in a certain price range and they have already seen everything in that price range but the “perfect property” was not there. (Actually it was there, it was simply priced too high so it fell into a higher price range where the buyer was not looking.) When that house comes on the market at its true market value, those buyers who have already seen everything else in that price range, jump on it like white on rice and purchase it immediately. Since the buyer doesn’t want to lose that house to another buyer, those sellers tend to get right at or very close to their asking price. That is, they don’t have to dicker/negotiate very much.

All the great marketing in the world will not sell an overpriced home. If brand-new Jeep Grand Cherokee’s sell for $44,000 you are not going to get $50,000 just because you advertised more. All buyers comparative shop so your listing price needs to be at fair market value otherwise it probably shouldn’t even be on the market at all.