You May Wind Up With Less
It seems a little counterintuitive, and many sellers are reluctant to believe it. Overpricing your home can mean you’ll wind up with less money in the end. It almost certainly will mean your transaction may be stretched from weeks to months or even years. There are a few things at work when this happens. Most often, a seller has an emotional attachment to his or her home (as all of us do) and believes it to be worth more money because, well, they want it to be. It may be that they’ve invested hard-earned funds in updates and want to see all that bear fruit. But most often it’s based on emotion and perhaps a misperception of how markets work.
Negative Perception Can Kill a Sale
In a neutral or soft market, overpricing almost always means your home will just sit. An analogy: when you’re trying to sell a car, and you price it too high, you won’t get calls. Just silence. It’s the same with real estate. You won’t get showings. The first thing that’ll happen is that brokers note to themselves: “that place is overpriced.” And after a while they’ll look at the number of days it’s been on market. Then thought creeps in: “what’s wrong with that place, anyway?” So: the first result is inactivity. This alone can be fatal. Then doubt creeps in about the quality of the property. And if it sits for too long, those doubts collectively morph into something resembling a stigma. That can be the kiss of death. The transaction price is then forced lower, sometimes far lower, because the market perception of the property is now negative.
A Benefit of Pricing Well
Pricing appropriately, using research and hard data to support the listing number, has a few benefits you might not think of. The first is that it increases the number of eyeballs that view your property online — often doubling or tripling the sum. This is crucial. If you’re priced below a certain benchmark (For example: $745,000, so you can appear in searches up to $750,000), the property may appear in many more online searches. More searches mean more showings. More showings means more potential for offers. And if you’re appropriately priced or even strategically underpriced, you may find yourself with multiple offers that bid the purchase price well above the list price. I recently had a home close $125,000 (or 9.1%) above its $1,375,000 list price. This was a much better result than pricing it at $1,600,000 could have yielded, and the clients were thrilled. A skilled broker can handle this situation deftly. And in the end, it’s a much less painful experience to negotiate upwards than it is to be forced by market reality to go in the other direction.
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