Consequences of Overpricing
The biggest detriment to selling real estate is the all too common problem of overpricing. Anxious sellers often want to know why their property is not selling. The answer is always the same: the asking price is too high.
Why do people make the common mistake of asking too much? There are several reasons. Some owners expect their present home to bring them enough money with which to purchase a more expensive home. In other words, they just are not facing reality. Others price it too high because they have not had their property evaluated by a professional. Relying on hearsay only, they put a price on their property that does not compete with other available properties.
An asking price must satisfy three basic criteria:
a) The asking price must be competitive with the asking price of similar homes.
b) It must allow for some negotiations so the buyer feels that he or she struck a fair agreement.
c) The final negotiated price must give the seller the highest possible return considering the condition of the property and the marketplace.
If your home is overpriced, here is the sequence of events you may expect:
1.) Salespeople, knowing it is overpriced, will not show the home.
2.) Your home will sit on the market while others around you are selling.
3.) Prospective buyers, seeing your home on the market for a long time, will begin to feel that there is something wrong with your home.
4.) You will begin to get anxious and lose patience.
5.) Because of the time restraints you are under, you will reduce the price below the asking price of competing properties.
6.) Your property will sell for a lower price than it is worth. Time and time again it seems to happen as described above. An owner who did not know or ignores the market facts in order to try to get top dollar ends up getting less than fair value.
Pricing Your Home to Sell for the Highest Possible Price.
Probably one of the most important decisions to make when you decide to sell your home.
• REAL ESTATE SALES PEOPLE DO NOT DECIDE WHAT A PROPERTY WILL SELL FOR, neither does the seller. The buying public determines what they will, or will not, pay for a home.
• THE COMPARABLE MARKET ANALYSIS (CMA) shows prices of homes in your area that have sold. It also shows the current asking prices of homes that are now for sale as well as the prices of homes that did not sell.
• OVERPRICED HOMES GET OVERLOOKED. Agents don’t like to show homes that they know are priced high. Buyers have become extremely educated as to what homes are worth. • WELL PRICED HOMES get buyers excited to make good offers!
• OVERPRICED HOMES JUST HELP TO SELL THE COMPETITION. Buyers are comparison shoppers.
• STALE LISTINGS MAY SELL FOR LESS THAN MARKET VALUE. Often a home can end up selling for less than it would have, had it been listed competitively right form the beginning.
• Pricing your home right the first time is one of the most important elements in obtaining the best possible price.
BE SURE TO:
•Select an experienced, full time agent • Select an agent who has seen many of the homes in the analysis
• Be realistic when determining the value of your own home.