Preparing a home to sell includes several steps, with one of the most important being the listing price. This critical decision is where a realtor’s experience and expertise matters. Agents familiar with the market and competition can suggest a listing price that will maximize interest as soon as the property hits the market, and ultimately get the home sold sooner than later.
It’s natural for a seller to want to make a nice profit from the sale of their home, but its important to keep in mind the dangers of overpricing.
A home’s highest value is when it hits the market. The moment a realtor places a listing on the market, other realtors and potential buyers are immediately interested. The first week or two is when a property is most desirable, and if the price is too high those potential buyers won’t even consider a showing. After a few weeks, the home’s novelty on the market disappears, and so do buyers.
Potential buyers will not return. As soon as a potential buyer thinks a home is priced too high, it immediately gets removed from their list and is forgotten. Even if the price is lowered, potential buyers may have already attached a stigma to the house and won’t consider it.
The stigma. If a home is overpriced when it entered the market, it’s likely to sit there longer. As a result of the initial desirability wearing off, potential buyers will wonder what’s wrong with it, even if the property is in perfect condition.
Money lost monthly. Each month a listed home sits on the market is another month the seller is paying the mortgage, taxes, interest and insurance, which ultimately cuts into the profit margin. This can start to cause problems for sellers who need to move quickly and use the money from their sale for the purchase of another home.
Appraisal problems. If an offer comes in at the higher price, the next hurdle is the appraisal. If the appraisal is significantly less than the selling price, then the seller may need to come down.
Currently there’s a limited inventory of move-in ready homes on the market but many buyers. Regardless if there are fewer homes to choose from, most buyers are not willing to offer over list price, because they understand that if the home doesn’t appraise for the agreed upon sales price, it could end the deal. This means the buyer would have to start their search over. Although today’s buyers want a home, they’re also being patient and waiting for one that fits their needs and makes financial sense.
Looking at recent buyer trends and the local market, an agent can offer sellers a range they feel will give the home positive traction as soon as it enters the market. The goal of listing a home is to sell it, and an experienced realtor helps their sellers get the most from their investment as the market allows, but if the first impression is the home is overpriced, then sellers can plan on it sitting on the market for awhile.
Samantha Evans is a licensed realtor and broker with Whalen Realty Group, which has more than 10 years of commercial and residential real estate experience. She is a member of MIBOR. She can be reached at [email protected]. Send comments to [email protected].
