When I meet with a potential seller one of the most important topics is price. That is natural. What can I sell my home for? We discuss that at length. I always provide a comprehensive CMA (comparative market analysis). In it I examine all the homes within a 1/2 mile radius that are within 10% plus or minus in size and the same # of stories that have closed in the last 90 days. These homes are what the appraiser will use to establish value. We discuss these homes and the homes currently on the market (your competition). Very often the client asks about setting a higher price than these studies warrant.
They want to overprice their home……Lets push the envelope. Why not?
Typically, most buyers have a budget. They may also be preapproved with a lender for a budget.
When buyers start shopping, they do so by their budget. When buyers hire agents, the agent also sets up the search criteria by the budget.
If your property comes on the market and it’s overpriced, buyers who are searching for your type of property may not be alerted to your new listing, because the new listing alert will not be sent to them because the pricing is out of their budget bracket. Their agent set up searches based on their budget and your home will not come up in that search.
FIRST TWO WEEKS
When a property first hits the market, this is when it will get the most action because this is when we as seller agents push out all of the new marketing. This time is critical.
The first two weeks is when your property will get the most action because it’s a new listing, a new product and anyone waiting for something new, will call to see it.
After that, it can be silent. Almost deafening. Now, you are just waiting for new buyers to come into the market.
Based on National Statistics this is what happens:
1. Priced Right = you should be getting offers
2. Showing but no offers= 4%-6% off the correct price
3. Low showings = 6%-12% off the correct price
4. No showings by 12% the correct price
If you are priced too high, you will know it within the first two weeks as there will be no calls, no showings. It can be super disappointing and discouraging. And you have wasted that first two week window.
Don’t buyers just lowball?
First you don’t want to work with the lowball buyer. Second, for most buyers if you are not within their budget price point, they may not even be alerted via online listing alerts or their agent’s listing alerts. Third,for most buyers if the price is too high, they will figure they cannot afford it and just move on. Finally most experienced buyers’ agents will tell their clients that your pricing is too high and that you are probably not a realistic seller (read hard to work with).
Making offers can be a time-consuming process for the buyers and their agent. They want to spend time making offers on properties they can actually afford to buy and those where they feel the seller is motivated to sell.
Pricing high is not a good plan. Pricing low is not the strategy either. The strategy is pricing at what the market will bear. We don’t determine the price, the market does. If comparable properties currently under contract and recently sold have sold at “X” amount, this is where your pricing needs to be to sell.
If you price your property higher than what the market may bear, it can be a long road for the selling process. A higher price will make any competition look better and also increase the time to sell. If you price too high, and comparable or better properties start selling before your home sells, they will be setting the new pricing.
This could ultimately lead to your property for selling for even less money than if you had priced it correctly from the beginning.
I want to get you top dollar. Don’t overprice.