Pricing your home accurately is the most effective way to ensure a successful sale and net you the most amount of money. Allow me to repeat that – pricing your home accurately is the most effective way to ensure a successful sale and net you the most amount of money. No amount of marketing can sell an overpriced home. Many sellers are tempted to list their home with the agent that quotes the highest price. Please keep in mind that the agent does not set the price. Only the market will set the price for which your home sells.
THE #1 MOST COMMON MISTAKE IN SELLING A HOME
The most common mistake made by many home sellers is to try to “test the waters” by pricing their home high at the beginning, and reducing it weeks later if it hasn’t sold.
As the chart above shows, the most important marketing time for your home is the first 30 days, because that is when the buyers that have already been in the market for a while will look at your house and make a choice whether or not they think it is a good value. These buyers are motivated, have already seen everything that is available for sale, and are waiting for something new to be listed. If they reject your initial listing price, the first impression has already been made, and there is also a very good chance that they will never consider your property again.
THE THREE MARKET TYPES
There are three types of overall market conditions when selling your home:
1. Seller’s Market
This is when the inventory in a specific area is low. Properly priced homes generally sell (are placed under contract) within 14 days to 21 days maximum. If your property has not received an offer within this time period, it is usually priced too high.
2. Normal (Balanced) Market
This is when there is no real perceived advantage to either the buyers or the sellers. Properly priced homes should sell within 30 to 45 days.
3. Buyer’s Market
This is when you have lots of homes on the market for sale in every price range and area. If you price your home just below the other similar homes on the market a sale should result within 60-90 days. Usually, homes are declining in value in this type of market. Therefore, the sooner you sell, the better it is for you.
REVEALING RESEARCH ON THE THREE MARKET TYPES
The National Association of Realtors researched the history of homes that actually sold in all three types of markets and they discovered two critical pieces of information:.
- 95% of all homes that closed sold within 30 days after the listing price (seller’s asking price) was set at the appropriate market price.
- Homes properly priced sold within approximately 3-5% of the seller’s asking price.
As of Summer 2017, We are currently experiencing a seller’s market. Therefore, if a property has not received an offer within 15-30 days, it is usually overpriced by at least 5% and possibly more.
KEY PRICING POINTS TO REMEMBER
- In most instances an appraisal is required when ﬁnancing a property. It is futile to price a property for more than it’s worth because it simply won’t appraise.
- Pricing your home properly can in many cases lead to multiple offers, letting you choose the best of the offer that nets you the most amount of money
- A property on the market for an extended period of time usually becomes “stale,” causing buyers to believe something is amiss, or not creating a sense of urgency in buyers to come view your home and make an offer.
- Most buyers are comparison-shopping. Looking at your home may convince them to make an oﬀer on a diﬀerent property if yours is overpriced.
- If your home is overpriced, you will not attract as many prospective buyers who would otherwise be prime candidates for your home.
- When you price your home too high in the beginning, you may ultimately need to drop your price below market value in order to attract buyers back to your home.
- An overpriced home tends to dampen other real estate agents’ attitudes, making it less likely to be shown.