Overpricing your home can result in it not selling! Then you need to keep reducing the price and you end up in a spiral following the market down.
For many years it has been a strong sellers market, with low interest rates and strong demand, sellers have seen multiple offers over asking. But while there is still a problem with low inventory, buyers are being hampered by strong interest rates compared to the last few years.
Interest rates are now hovering between 6.5 and 7% and with inflation rising again they may not be dropping for sometime. High interest rates affect what buyers can afford, reducing the amount they can pay for a house.
Pricing a home for sale needs to take into account what homes have sold for recently that are similar or as real estate likes to say comparable. Also, we need to consider interest rates, buyer demand and the competition as well.
If other homes are seeing price drops, then it is an indication they have over-priced their asking price and are needing to adjust to maintain interest, Asking too high a price can affect showings, causing reduced showings and less competition for the house.
If showings are dropping as well, this is an indication buyer demand is starting to drop as well. For those homes which are selling we also look to see how long they were on the market. If the number of days on market is rising this again indicates less demand as buyers are taking longer to make an offer acceptable to the seller.
We also look to see if the sales price is higher, lower or the same as the asking price. Higher sales price indicates strong demand and possible multiple offers, lower than the asking price indicates the market felt the house was overpriced.
Pricing a home for sale is a matter of considering all the data, condition of the homes selling as well.
The main risk of overpricing is that you end up following the market down if the market is changing. Just because there is still low inventory does not mean the market is not changing. If buyers feel prices are going to drop, then they may just wait it out till a home reaches a point where they feel it becomes good value.
Remember, most buyers have seen multiple houses for sale and generally have a good feel to value. Sellers, are not in the same position, unless they make the effort to go visit homes with their realtor and get a feel for what homes are selling for. Unfortunately, most sellers do not do this and therefore have an unrealistic expectation of what price their home can attain.
So, don't make the mistake of overpricing your home, for help with pricing your home along the Main Line and in Chester County contact Nick Vandekar, Selling the Main Line and Chester County with Realty ONE Group Advocates, office 484-237-2055, cell or text 610-203-4543, or email Nick@VandekarTeam.com.
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