When it comes down to it, the most important advice a Realtor can give home sellers is how to price their home correctly. No matter how attractive or well-maintained a home may be, how many upgrades it has or how well it shows, if a home is not priced correctly, it’s going to be a tough sell.
The battle for Realtor’s most often lies with aligning what home sellers’ think their home is worth with its true market value. These different realities can be difficult to merge when working with a home seller to find the list price.
Here are a few pricing myths that often get in the away.
It Is Better To Price The Home On The High Side.
I think the idea here is that the seller can always come down and If buyers are interested, they can make an offer. Well, that is not always true; If a home is overpriced, a seller risks losing potential buyers who aren’t willing to stretch into an uncomfortable price range.
The list price sets the stage and may invite or deter buyers based on the dollar amount.
If My Home Is Priced “Just Right” I Will Risk Leaving Money On The Table.
Actually, the opposite is true. A well-priced home tends to generate a lot of interest and often results in multiple offers.
A shorter marketing length brings strong offers that could result in a home selling for over asking price.
Buyers are less likely to play “let’s make a deal” and nit-pick every little thing when they feel the urgency of competing with other interested buyers for the same house.
If It Doesn’t Sell This Time, I Will List Again Next Year.
A little lesson about selling your home: A home that sits is not like a good wine, it does not get better with time.
I see it every day, the longer a home stays on the market, the more likely buyers are to question its value and offer a lower purchase price. The same question arises,” what’s wrong with it?”
Subsequently, any offers that come in tend to be perceived as too low by an already-frustrated seller who thinks there weren’t any buyers for their home while it was on the market the first time.
Granted, some seasons can be better than others and that really depends on where a home is geographically located. Here in Arizona, we have a very well-rounded selling season and rarely see times when we would want to wait to list.
The additional costs of a mortgage payments, maintenance and upkeep as well as the possibility of needing to make repairs to an aging roof or AC system cut into the profitability of commanding a better price next year.
$X Price Is As Low As I Will Go.
When faced with an offer that is less than what they want, sellers love to draw a line in the sand and dig their heels in over an arbitrary number that they deem to be “their bottom line.”
Who decides what a property is ultimately worth anyway? Most buyers see the glass as half empty versus half full, and in some markets and real estate cycles, they are holding the cards.
Sellers can decline an offer based on a number, but they may never get there with another buyer, and a subsequent offer may be lower or layered with conditions and complications.
It is important to be flexible and keep your eyes open to changes in the market as they can happen quickly.
The Buyers Offer Is Simply Too Far Off The Asking Price To Counter.
Sellers are often disappointed at the initial price when an offer is received and ask, “why so low?” Look at it this way; A buyer has stepped up and put pen to the paper with a proposal. An offer is an invitation to negotiate and begin discussions about the property.
It can be easy to get offended, but it’s best to keep emotion out of negotiation as much as possible and work in good faith with what’s presented. A seller will learn quickly if it looks like a deal may come together.
Unless it is a really hot property, priced aggressively or in a low-inventory market, buyers typically do not offer more than they feel that they have to, especially on a first pass. They want to get a sense of the seller’s flexibility or lack thereof before deciding their next move.
It is important to take every offer seriously and consider a counter offer in the hopes that you can come together with a price that will meet both the buyer and seller’s needs.
Outdated Features Shouldn’t Impact The Selling Price.
So the home has “updates” circa 1990 with white melamine cabinets, beveled edge laminate counters and 12-by-12-inch ceramic tile floors with brass fixtures, and the seller expects the buyer to pay full asking price or close to it?
Reality check! Today’s buyers are looking at how much they are going to have to spend to bring the home up to today’s standards and are going to deduct accordingly when formulating an offer.
If the home is somewhat dated, price out the cost of replacing granite counters, updating appliances, repainting and other upgrades, and it will likely be much less expensive to adjust the price without as much hassle.
Pricing a property is a delicate dance. The bottom line is that the market doesn’t always guarantee as strong a price as sellers want or expect. Unless the home is a highly sought after, rare type of property you will need to look at all market factors and work with a Realtor who knows the current market conditions.
Setting the tone with the right pricing will often set the tone for how smoothly the selling experience will unfold.