The Top Mistake Homesellers Make

Pricing your home too high in the marketplace is the single, worst mistake new homesellers make when listing their homes. The train of thought is that they’ll list high, then come down as needed, or negotiate when the offers come pouring in. The problem is, for those homes, they rarely do. Here’s why overpricing a home is the top mistake homesellers make.

But We Want More Money

When the average homeseller sits down to interview real estate agents, it’s easy to get caught up in the excitement over choosing a sales price. More money means more financial opportunities. Perhaps it means you can afford to buy a more expensive home, help pay for your child’s college education or take that greatly overdue vacation. Unfortunately, uninformed sellers often choose the listing agent who suggests the highest list price, which is the worst mistake a homeseller can make.

Establishing Value

The truth is it doesn’t really matter how much money you think your home is worth. Nor does it matter what your agent thinks or ten other agents just like him. The person whose opinion matters is the buyer who makes an offer. Pricing homes is part art and part science. It involves comparing similar properties, making adjustments for the differences among them, tracking market movements and taking stock of present inventory, all in an attempt to come up with a range of value, an educated opinion.

This method is the same way an appraiser evaluates a home. And no two appraisals are ever exactly the same; however, they are generally close to each other. In other words, there is no hard and fast price tag to slap on your home. It’s only an educated guess and the market will dictate the price.

Is it Too Low?

Homes sell at a price a buyer is willing to pay and a seller is willing to accept. If a home is priced too low, priced under the competition, the seller should receive multiple offers to drive up the price to market value. So there is little danger in pricing a home too low. The danger lies in pricing it too high and selecting your agent solely on opinion of value.

How It Goes Wrong

Seller Sam hired his agent, one among several he found on the internet, who happened to tell him that he could get him a higher price than any other agent. Guaranteed it even. And solely because his suggested list price was higher than the others, Sam signed on the dotted line. And so it was that Sam’s home hit the market at $410,000. 90 days later and a lot of frustration later, the listing expired and Sam was left to start all over.

The next agent, who wasn’t even from the local area, listed the home at $400,000 and made no other suggestions or changes. Naturally, the months passed and eventually they decided to drop the price again, this time to $385,000. Showings increased, but still no serious buyers came forward.

By the time the last agent was hired to list this home, Sam had grown weary and exhausted. It was now 12 months later. Together, Seller Sam and his agent priced the home at $350,000. It immediately sold for all cash. The sad part is the comparable sales in the neighborhood fully justified a price of $370,000, but the home had been on the market for too long at the wrong price, and now the market had softened.

Solving the Problem

So, the question is how much money have those expired listings cost the seller? The financial loss often exceeds the extra mortgage payments paid and goes beyond the uncompensated hassle factor of trying to keep a home spotless during showings. It affects the value that a buyer ultimately chooses to pay because it’s not a fresh listing anymore. It’s now stale, dated, a market-worn home that was overpriced for too long.

So, when you interview agents, ask them to explain HOW they came to the value that they are suggesting and them ask them what you can do to help ensure that you’ll get your quick sale. You see price, is NOT everything – location, condition, upgrades, and contract terms all will affect how well your home is perceived. What’s more, learn what these agents are going to do to market your home, to get it in front of the most eyeballs possible, and to get you the highest sales price possible.