An Agents Nightmare – Overpricing A Home

Pricing a home is essential to not only getting the property sold, but to get it sold quickly and for top dollar. Your home will most likely sell for top dollar when it is fresh on the market – usually within the fist couple weeks. At the beginning of the marketing cycle, you are exposing your home to ALL the buyers on the market. Within 30-days you reduce that number and could only be exposing your home to new buyers just coming in to the market.

When pricing your home, it is important to keep in mind that buyers to tend to “shop around”. They want to view homes and search for the one that not only meets there want and needs, but also for the best deal out there. If your home is priced too high for the current market, it will make the other homeshouse-fire-clipart-9iRBRexie look more appealing – you will be selling your competition.

Price is the most critical item that not only buyers look at, but also real estate agents, when looking at selecting homes to view. Poor location, poor condition, terms, floor plan, etc. can all be cured with pricing.

When it is time to negotiate an offer; if it is priced too high, it is possible that no onw will seriously consider or see the benefit of starting the negotiations. The more accurately priced the property is, the less likely the buyers is to start the negotiations with a “low ball” offer or even feel the need to negotiate.

If you do get an accepted contract, at the sale, your property will need to be appraised (if buyer is financing the purchase). If it appraisers below the contract price, there will be a problem. Such as:

  • Lower the purchase price to appraised value
  • Cancellation of escrow
  • Buyer trying to find the funds to come up with the difference between appraised value and original purchase price

 

Incorrectly Price Your Home – Lose Thousands

Incorrectly pricing your home can be very detrimental to, not only getting your home should, but also getting top dollar for your property. Following are six items to take into consideration when pricing your home:

  1. Your home will most likely sell for top dollar when its fresh on the market
  2. Buyers buy after they shop around. Buyers are in search of the best buy (a great deal). If your homes is priced too high, it will make the other homes look more attractive – you will be selling the competition
  3. At the sale, your property will need to be appraised. If it appraises below the contract price, you will have a problem. Many sellers then drop their price too much to get it closed!
  4. Price is the most critical item that both buyers and real estate agents look at when selecting homes to view. Poor location can be corrected with price, so can bad condition, terms, floor plans, and decorating
  5. Negotiations: If it is priced too high, it’s possible that no one will seriously consider or see the benefit of starting the negotiations. The more accurately priced the property is, the less likely the buyer is to start the negotiations with a “low ball” offer or even see the need to negotiate. Buyers will be more unreasonable than the sellers are going to be
  6. At the beginning of the marketing cycle, you are exposing it to all the buyers on the market. Within thirty days, you will only be exposing it to new buyers coming on the market

Overpricing

There have been so many times I have heard of an agent going to a listing appointment and loosing out on the listing because another agent came in at a much higher list price than they did. These same listings then sit on the market for 70, 80, 90, over 100 days; have multiple price reductions; and either sell for the list price quoted by the other agents (if not under) or they do not sell at all – which, sadly, tends to be the case a majority of the time.

Properties that sit on the market for extended periods of time, due to overpricing, become stagnant. Buyers will either wonder what is wrong with the property or will play a “waiting game” to see how low the property will go and once it is listing for undervalue, will pounce on it and score a great deal.

It is SO important to price a property correctly (reflecting the type of market in play) because those first initial days on the market set the whole tone for getting a property sold. A listing will generally have more activity the first few days on the market, compared to a listing that has been on the market for more than 30-days.

If an agent does a Comparable Market Analysis (CMA) for you, really look at the comparable properties being used and the type of adjustments made – all which leads to the agent coming up with a “fair market value” for your property. Ask questions and to how that particular agent came up with their value.

Pricing your home accordingly, based upon the current market and other properties, is key successfully getting your property SOLD.