Priced to Sell
Without a doubt, the most difficult challenge that home sellers face in a buyer’s market is knowing how to price their homes. In a market such as this, where there may seem to be no rhyme or reason as to which homes are selling, and for how much, proper pricing can be especially tricky. (I’ve written about this before, and overpricing is still at the top of my list of real estate pet peeves.) Overpricers (sellers who can’t seem to read the writing on the wall) generally fall into 3 categories:
1. Those who don’t want to face how much money they may have “lost” by not selling a few years ago.
2. Those who believe that overpricing the property will result in a higher sales price.
3. Those who fall prey to realtors who “buy” their listing.
My responses to these types of sellers are as follows:
1. Home equity is purely imaginary, because it is always based on what the bank thinks you can sell your home for. There is no pile of money buried under your house that shrinks or grows with the state of the housing market. Therefore, unless you are upside-down on your mortgage, you will not “lose” money by selling your house for less than what your neighbor sold hers for three years ago . If you are actually upside-down on your mortgage, then I really feel for you – but that doesn’t change the fact that overpricing your house to make up for that loss will only harm you more in the end. I’m sorry, but it’s true.
2. Overpricing your property because you think it will put you in a better bargaining position never, ever works. EVER. If you think your home will fetch $650,000 based on recent comps, pricing it at $675,000 because you know buyers are going to bargain you down, anyway, will not get you an offer of $650,000. It will most likely get you offers that are insultingly low or no offers at all, because any interested buyers will think you are unreasonable. With so many houses on the market, why would a buyer choose to deal with an unreasonable seller? Too many times, I have watched sellers set up this “negotiating cushion”, only to watch their homes languish on the market, have to be pulled off the market, or have to go through a price reduction. Here’s a little tip: You are better off pricing your house 1 to 2% below the most recent comps than you are overpricing and then going through a price reduction. Either approach will likely get you to a similar price. But pricing your house below comps could actually get you multiple offers or your asking price quickly, while overpricing and then going through a price reduction will end up substantially weakening your bargaining stance. You don’t want that.
3. It’s obvious from the sheer volume of overpriced homes on the market that there are some realtors out there who aren’t doing their jobs properly. Realty is like any other business in that there will always be those that will tell you what you want to hear, or who may not stand their ground firmly enough when they do tell you what you don’t want to hear. When a realtor knowingly agrees to overprice your house just so they can get your business, that’s called “buying a listing.” Any realtor who “buys” your listing is not looking out for you – he is looking out for himself. If you’re going to be paying a realtor a chunk of money to help sell your house, don’t you want someone who is going to truly have your best interests at heart? I know of realtors who refuse to take on overpriced listings, and those are the realtors that I would want to hire. Those realtors are the ones who don’t feel right leading you down the primrose path, can’t stomach the thought of adding yet another home to our overstocked inventory that will then sit there, or who take their reputations too seriously to engage in that sort of behavior. Here’s another little tip: A realtor who believes that the home is priced properly will be a much better negotiator and advocate for you than the one who just told you what you wanted to hear.
Now that I got that off my chest…here’s a link to the Loudoun Times-Mirror article that got me thinking about all this again. Entitled, “Selling Your Home in a Buyer’s Market”, it lists seven things to do to prime yourself for proper pricing. Good luck!
