Most Common Seller Mistakes
Why testing the market could cost you $$$$
Realtors get asked all the time "What do you think my house is worth"? The honest answer is, “It's what the buyer's out there are willing to pay for it”. Pinpointing an asking price for your home can be a challenge. If you overprice it in this excellent market, it can still end up languishing for months. The longer it takes for your house to sell, the less money you’ll net in the end. If you want to maximize your profit and minimize your time on the market, here are some pitfalls to avoid:
1. Basing your list price on what other homes are priced at for sale.
This is what many homeowners do. They look at other homes in the neighborhood currently for sale and base their asking price on those numbers. Wrong! These homes have not sold, and in order to correctly price your home you need to look at closed sales not older than 6 months to get an accurate gauge. Typically, appraisers use comparable sales that are no older than 6 months when at all possible. Pending contracts can also guide you, as they give you an idea as to which asking price attracted an offer. This is very important! In today’s market appraisals are a huge obstacle. Lenders are typically very conservative with appraisals and a low appraisal can wipe out your sale.
You can start with an online evaluation of your home right here! Keep in mind, this is a computer generated market analysis and sometimes does not give the proper value for location, upgrades, etc. We would be happy to share with you up-to-date comparable sales data from our MLS website. This is the best source for accurate information. Or if you want to get an INSTANT eProperty Valuation, click here.
2. Basing your listing price on what you paid for the property.
Many sellers let what they paid for the property influence where they would price their home. We often hear "We paid $250,000 five years ago and we need $300,000 to break even and that doesn't include your commission!" The fallacy in this thinking is that some sellers believe that the agents and sellers set the prices at which properties sell. In actuality the buyers determine salability in any given market. The stock market doesn't care that you bought GM at $50 and had your chance to sell at $45,35,25 etc., but now it’s selling at $4. If you don't want $4 then you wouldn't sell. The real estate market is no different. The price you paid for your home has no bearing on what the buyers are willing to pay for it.
3. Overestimating the value of improvements and upgrades.
This is a tough one. Most sellers have a hard time understanding that the great things they've done to improve their home doesn't necessarily impact its value. Some improvements do increase the property’s value, such as adding square footage, remodeling kitchens and baths or bringing the home standards up to other properties in the area. But many improvements may make your home more sellable but don't necessarily add to its value. Keep in mind, you made the upgrades for your own enjoyment. Your taste and style may not be what the buyer is looking for and therefore may not have much value to them.
4. Testing the market
Sellers often want to try a price. "Let's list it at a higher price for a while and see what happens" is a common phrase that we hear all too often. Unfortunately it usually costs the seller time and money and works against them. Realtors know that the beginning of a listing is the "honeymoon period" where the listing gets the most attention, and it usually lasts 30 days or so. This is when the most motivated buyers have not found the right property, and now they are eagerly scanning the market for new listings. When they find one they rush over to see it. We can’t tell you how many times we are showing houses, and the buyer’s phone or iPad pings notifying them that a new home meeting their criteria has just hit the market. Sometimes we call the Selling Agent right from the home we are showing and rush to get our buyer over to see the newest real estate listing! If you list your house at the wrong price, that motivated buyer may not even look at it or not make an offer. It limits your activity to new buyers coming into the market that are not as motivated or as knowledgeable, and therefore unlikely to pull the trigger on your home.
If your home goes past the 30 day period it has a good chance of staying on the market longer. Price reductions can generate interest, but it never gets the same attention as when it's new on the market. The old saying “Wrong Price = Wrong Buyer” is very true.
We are here to help you get the most from your real estate sale. We want you to avoid these pitfalls. You can start the process by getting an INSTANT eProperty Valuation in order to find out what your house is worth. Or, call us today for a complete market update and a more detailed market analysis of your property. We can be reached at 727-644-1476 or email us at email@example.com.