We have heard recent statistics that state as many as 30% of the current sellers on the market are testing the waters and may not actually me motivated to sell their homes. Most of these would fall under the category of investor or the "wouldn't it be nice if we could get that much for our house, hey, let's try" group. When a market begins to shift you will see this type of activity due to home owners considering this as a last chance for a potential sale at a price that is very likely no longer possible. We ourselves have recently rejected three opportunities to list homes in the area due to unrealistic expectations of the seller.
We recently came across this article and thought we would share it with anyone considering a sale in the current market place:
When someone decides to sell their property, they want to sell it for as much money as the market will allow. Pricing too high will keep their home from selling. A low price will keep them from receiving full value. When trying to come up with that “Right Price”, Sellers need to consider the following:
Understand the Market. It’s the market that determines value. When determining the listing price Homeowners should look at the price of similar homes in their neighborhood that are currently for sale and those recently sold. They should also have their Real Estate Agent provide a summary of listings of similar homes in their neighborhood that have been withdrawn or expired.
Carefully and Honestly Evaluate the Condition of your Home - Most Buyers base their decisions on the condition of the home as well as the price. Sellers need to take the necessary time to prepare their home to attract the most potential Buyers.
Listen to Your Realtor - Real Estate Agents constantly review property sales and market conditions. The Agent can provide invaluable expertise and information necessary for Homeowners to effectively price and sell their home.
THE MAJORITY OF HOMES THAT ARE PRICED CORRECTLY ARE SOLD WITHIN THE FIRST ONE TO TWO MONTHS. IF A HOME IS NOT SOLD WITHIN THE FIRST MONTH, THE PRICE IS PROBABLY TOO HIGH.
The Benefits of “RIGHT PRICING”
A well priced home gets a better response. Sellers will attract more potential Buyers. More Real Estate Agents will show their home because it is attractively priced. Their home sells faster.
Let’s face it, selling a home is stressful. The quicker someone sells their home the less wear and tear on them and the less stress.
The closer the price is to market value, real as well as perceived, the higher the offers. The Seller’s home never loses its "marketability".
The Factors that Influence Overpricing
All homes need repair and maintenance from time to time. Homeowners should not ignore items that need attention, particularly when placing your home on the market. But they should not assume that they will receive and adequate return for necessary but extensive renovations, repairs and maintenance. These may be necessary for full market value but are not necessarily a cause from an increased price.
We all need money. Sometimes more than other times. While that may be a factor in placing a home on the market, Sellers need to be careful that it does not cause and over priced listing.
Owning a home is the great American dream. Moving up to a bigger and better home has also become part of that dream. The desire to purchase in a higher priced area can often influence a Seller to price there current home too high.
Sometimes Buyers pay over market for their current home and when it comes time to sell, their original purchase price becomes an influencing factor in pricing their home. Remember, the market determines price, not original purchase price.
A Seller that does his or her homework prior to the pricing decision will usually be able to understand, set and live with the “Right Price”. Lack of “Real” market information often leads to overpricing. Friends and neighbors while valuable are not good sources of valid information.
A high price does not mean a Seller will have bargaining room. On the contrary. It usually means there will be no opportunity to bargain because it drives potential Buyers and Real Estate Agents with ready wiling and able Buyers away.
Everyone has a emotional attachment to their home. Sellers need to keep that in check when selecting the “Right Price”
As soon as a home comes on the market, there is a flurry of activity surrounding it. This is the crucial time when potential Buyers sit up and take notice. If the home is overpriced, it doesn't take long for interested parties to lose interest. By the time the price drops, a majority of the buyers are lost.
The Results of Overpricing
Sellers often think that interested buyers will make an offer if the Buyer doesn‘t like the price. Actually, in this market, just the opposite occurs. Buyers who can only afford homes in a lower price range will never see their home. Those Buyers looking in their price range will recognize that they can get a better value elsewhere. Overpricing their home may only accomplish the sale of someone else’s home.
Quite often Sellers think that if they price their home high initially, they can always lower it later. When a home is priced too high, there is very little showing activity. After the home has been on the market a few weeks Sellers realize that it is necessary to make a price adjustment. But now there are two other things to consider. In a changing market such as we have now the market value may have gone down, and Buyers tend of homes the believe have been on the market too long. It now becomes a game to find the right price that will entice a Buyer. That price might now be below market value. So the effect of initial overpricing is creating a sales price that may be below market value. And the sale of a home for less than it is worth.
“RIGHT PRICING” Affects Showing and Offer Activity
“Right pricing” means offers. Incorrect pricing means fewer or no offers, price reduction(s), more days on market and the potential for the property not to be sold.
Recent data has shown that a home that is priced within 1% of the market value will generate showings and will probably receive offers. A home that is priced from 1% to 4% of the market value will be shown but will probably receive no offers. A home that is priced from 4% to 8% of the market value will generate drive-ups but will not be shown and will receive no offers. A home that is prices over 8% of the market value will have drive-bys only and the likelihood of recovery to a marketable price that will generate an offer is slim. As can be seen, there is little room from error.
“RIGHT PRICING” is the key to an efficient and effective listing of a home for sale. It is the key to a stress reduced sale. It is the key to receiving the highest and best offer. Sellers should take the time and work with their Realtor to make sure the “Price is Right”.
