When selling a home, especially in todays market, it’s critical to price your home correctly. What I mean by correctly is, you need to price it at a value that gives you a shot at selling your home quickly. When you put your home on the market, most of the activity you will see is going to be within the first 3 weeks.
Those first three weeks are your first impression, and if you price your home to high, you have a pretty good chance of not selling your home for a very long time. If you don’t get an offer within the first 3 weeks of being on the market you can bet, your price is to high. I know that sounds unrealistic in todays market but it’s true, and heres why.
Your home goes on the market at a high price, you get a lot of showings, and people don’t submit an offer. Later down the road, say about 2 months, you still haven’t recieved an offer. You and your REALTOR(R) decide it’s time to reduce the price. After the reduction you get an influx of showings, but still no offer. You reduced the price by $5,000, and you were sure that would be good enough to get an offer.
Another month goes by and you still don’t have an offer. All your showing feedback is good, the location is nice, the home is in great condition, but you can’t seem to get an offer. You reduce the price again. You get more showings, and after reducing your price by $15,000, five the first time and ten the second time, you finally get an offer after 4 months on the market.
This offer comes in below asking price, which most offers do. You do a little negotiating, and you finally come to a deal at $23,000 below your original asking price. Don’t think this happens? I see it happening all the time.
Now, let’s think about how much you could have saved if you priced your home at market value from the start.
You put your home on the market at $10,000 below what you put it at in the first scenario, which is what your REALTOR(R) recommended you price it at. Your first 2 weeks brings a lot of showings just like the first scenario, and you get two offers. The first offer is about $5,000 lower then asking price, and the other offer is at asking price, but with $4,000 back in closing costs.
Essentially, the offers are about the same, which brings you into a multiple offer situation. You counter back to both, letting them know that you have multiple offers, and they should bring their highest and best offer. Both offers come in at asking price, and you decide to take the offer with the best buyer. The buyer with 20% down, and will close in 4 weeks.
Compare the two scenarios:
First scenario: You ended up losing $23,000 off your asking price, which was $13,000 lower then the second scenario, and you also paid 5 months more on your mortgage payment at $1,500 a month. That’s another $7,500 that you paid. In total, because you didn’t price your home correctly, you ended up losing out on an additional $20,500 on the sell of your home.
This scenario happens all the time. I see sellers that think when you price your home over market value, even by as small amount as $5,000, it’s not that big of a deal, and they can reduce the price later if it doesn’t sell. That’s the wrong idea when trying to sell a home.
If you price your home at or slightly below market value, you have the chance at getting multiple offers, selling your home faster, and netting much more then if you over price it. And, if your home doesn’t sell at the lower price it wouldn’t have sold with the higher price either.
So what’s the risk? If you ask me, the risk is selling your home too fast, which isn’t really all that bad is it?
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