Pricing Your Home Too High

Pricing Your Home Too High

Overpriced Homes Don’t Sell

Pricing Your Home Too High is a Big Mistake

Selling your home can be tough, especially if you make some common mistakes. Stay away from those mistakes and you may find it’s not as difficult as you thought. One of the most common mistakes and most detrimental is when home owners price their homes too high.

Pricing is the single most important factor in the marketing of a home – between 80-90%. No matter how great the exposure, an overpriced home will not sell!

But this common mistake continues to plague home owners with long difficult listings of their properties, higher anxiety and often below fair market value final sale prices.

Below are the four main reasons folks price their home too high, and in turn kill their chance to get their best price and quickest sale.

1) Pricing without a Professional Real Estate Agent’s Comparative Market Analysis

Determining the right and fair price for a home is not an easy task. An experienced real estate agent will take into account many different factors before coming to a final pricing suggestion.

While completing a CMA (comparative market analysis) the agent will look at all the features of your home, the individual condition and popularity of each of those features, and how those features compare with recent home sales, as well as all the other nearby homes currently listed for sale.

A CMA in a community where the homes were all built by the same builder and with only a few different building plans is far easier than in a community that used several different builders and a wider variety of home plans, styles and features.

2) Pricing the Home High to Leave Room to Negotiate

Far too many sellers feel most buyers will low-ball offer on “any” list price a seller has indicated. The truth is, fairly priced homes will generally pull offers close to asking price. Most buyers have been looking for weeks or months to find the right home at a fair price. When the right home at a fair price shows up, they are afraid another buyer will simply offer that fair list price first and take the home from them. Fairly priced homes are an incentive to buyers to make offers at or close to asking price.

3) Your Home Priced High because You Have Time

It’s not rare to have sellers say, “We’re not in a rush to sell, so we’d like to price our home 10% over fair market value and just see what happens – maybe we’ll get lucky.”

Two things to consider:

  1. A real estate appraiser (who works for the bank) will likely never approve of a value that is too high. If the home doesn’t qualify for the loan amount your buyer is requesting, the contract won’t close.
  2. it is critical to understand that right now as your about to put your home on the market, there are multiple buyers that have already been looking at homes for weeks or even months. This is by far the largest group of buyers you’ll ever have looking at your home at one time. All these buyers have been waiting every day for new listings to appear, racing to get to the most appealing new listings the fastest in order to write offers on any great new listing that shows up at fair price. If you price your home too high, those buyers will either look at the home and simply not write an offer because they know they’re not willing to come anywhere close to what your asking. Worse yet, they will determine your home is way overpriced before ever coming to see your home. From that moment on those buyers may NEVER look at your home again. They won’t remember exactly why it was that they were not interested in your home, just that it was another of the dozens of homes they previously were not willing to consider. Those buyers will keep their attentions on only the fresh new listings, while your home continues to sit.

4) Using The Real Estate Agent Who Suggests The Highest Price

In every market there are hundreds or even thousands of real estate agents. Atlanta alone has well over 6,000 agents.  And like any other business there are true professionals, and those that are simply not. Of those that are not true professionals, some are not because they simply haven’t put the time and effort into building their skills. Sadly though, there are others that put their interests over yours. Like every business, not every player has the same principles.

In our business, those agents who intentionally tell their seller prospects their homes are worth more than they they know that those homes are worth are said to be “buying their listings”. Of course, sellers want to hear their home is worth many thousands more. Those extra bucks would mean a new car, a great vacation, extra money for the kid’s college fund, or whatever.

Why would agents want to do this? Certainly the agent knows the house won’t sell for that much, right? So how would this benefit the agent? This over-pricing technique does two things for the agent.

  1. These agents hope to show more inventory which makes them look like a more powerful agent in front of other potential sellers when they’re trying to gain their listings.
  2. These agents “use” overpriced listings to generate buyer phone calls from their signs, print and Internet advertising… buyers they intend to sell other, more fairly priced homes to.

Not as prevelant in our business today as 20 years ago, but these agents do still exist. This is the “used car salesman” side of the business that continues to undeservingly stain by association the reputations of so many high quality honest agents working today.

Price it Right!

What we’re hoping you’ll learn from this page: Price your home right, and it will sell! Overpricing is an error you can avoid. Be aware, investigate your potential agents, look for signs of true credibility, get a CMA and price that home fairly. You’ll do fine and will dramatically reduce your stress as you move through the process of listing, showing and selling your home.

Check out the unedited version of the information above on our main site Pricing Your Home Too High, or go to our main Home Sellers Page to learn more about listing your home for sale.