Deciding on an appropriate selling price for your home can be complex. You want to sell your home quickly, but you don’t want to ask so much that it turns off would-be buyers. Your home is most likely the largest investment of your lifetime. It means more to you than anyone else because it holds memories from the years you lived there. When you begin the process of selling your home, you must shift your thinking to a more business-minded approach. After all you’re selling a product. This will require a bit of detachment.
Ignoring the market conditions and trends can prove to be risky. Many people make the mistake of doing so and learn to regret it. By far the greatest risk is that you’ll sell your home for less. This is why it’s so important to understand pricing strategy.
An inexperienced agent may convince you to list your home at a high price. This will make you feel great hearing that they think your home is worth so much and the possibility of earning more than you ever dreamed off the sale of the home. But maybe it is just a dream. It could slowly turn into a nightmare because oftentimes homes priced too high end up languishing on the market for months because buyers don’t even look at them.
How does overpricing hurt?
Overpricing can cause the following problems:
More time on MLS
You’ll want to find a price that will be appealing to buyers so a price point at level or better with comparable homes in your local area will be the sweet spot. If your home stays for a long time on the market, people will begin to wonder what’s wrong with it. If the price is too high, potential buyers may ignore it. The market may not look as good later on when you’re still trying to sell your home, and you may have to settle for a much lower price than your original listing price.
Stress for Seller
Keeping your home in tip top shape for showings can be trying when you consider the amount of work you’ll have to put in to maintain showroom condition rooms. This will be easier for the cleanest of neat freaks, but how about for six months or longer? This can be stressful, not to mention the disappointment of not being able to sell your home and move on from there.
Mortgage Payments Mount Up
You’re making a monthly mortgage payment every month regardless of whether or not you’re living in the home. As long as the home remains unsold on the market, the more money you lose in unwanted mortgage payments. Remember, when you set a high listing price, there’s no room to negotiate up.
Your Home Will Be Overlooked Online
Many people searching for a home will do so online on sites such as Zillow and Realtor.com. There are ways to filter your search by price. If potential buyers searching for a home in your area filter by price in their online search, your home will not pop up on their screen at all if you’ve overpriced your home.
Reason to Low-ball
Don’t give a potential buyer reason to give you a low-ball offer. This often happens if a home has been on the market too long. Sellers can see when your home was listed and how many days it’s been on the market. This often leads to low-ball offers because the perception is that there must be something wrong with your home since it has been on the market for so long.
What to do…
Don’t rely on Zillow estimates of your home’s value. These have been proven to be way off many times. A computer algorithm doesn’t replace an experienced realtor who knows the local market and comparable prices.
You can avoid these problems with overpricing by hiring an experience realtor who knows the market well and has pricing strategy down to a science. Look for a real estate agent that has a proven track record of selling homes in the area. Find out how long some of these homes stayed on the market. An honest agent will be glad to show you their sales record.
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