SELLERS, DON’T FALL INTO THE OVERPRICING TRAP!
Pricing strategy is one of the most important elements in selling real estate.
To get top dollar, it’s essential to price a property accurately for the current marketplace. The reason is simple. Virtually all buyers search for properties online before scheduling time to see a listing in person. That means these buyers know in great detail what comparable homes are listed for in your area. If you overprice the property, you risk having your home sit on the market with few buyers who will consider viewing (let alone putting an offer on) a home that is clearly more expensive than comparable homes.
This lack of interest can lead to a compounding issue. If your home is listed for a longer than average time, you will have created a perception problem. Buyers often assume that there is something wrong with a property that’s been sitting on the market for too long.
When you fall into the overpricing trap, corrections can be costly. To generate enough interest in your property, you may be required to drop the price below what would have originally been considered market value. Instead of giving yourself room to negotiate with buyers, you will have set yourself up for selling the property under market value.
To get top dollar, it’s essential to price a property accurately for the current marketplace.
What are the main reasons that lead sellers to fall into the overpricing trap?
Nitpicking the comps by placing too much value on negligible differences between their home and the comps is one of the very common mistakes sellers make — “My home has a new water heater and a larger deck than my neighbor’s. I also have a beautiful lemon tree and rose bushes in the yard!”
While small features like these are worth pointing out to potential buyers, overpricing your home on that account is not a good idea at all.
Some sellers focus on the return on their investment too much and set the list price based on what they want or need to sell their home for. The reality is that a home’s worth is determined by what a buyer is ready, willing and able to pay for it. If you are looking to buy a $900,000 home after selling your current residence, that doesn’t mean that your home will sell for close to that.
Sellers looking to negotiate may be the most common reason people overprice their home. The strategy behind that may look like a Craigslist scenario, where you post your old rocking chair at an inflated price, an offer comes in at half that, but you eventually end up negotiating and selling the item for 60% of your original list price. It doesn’t work quite the same in real estate. Pricing the home right in the beginning and creating that much needed demand and interest from buyers is a way better strategy than trying to chase the buyers hoping that they will fit into the scenario that you imagined in the first place.
“It is always cheaper to do the job right the first time.”