If you want to command top dollar and get your house sold quickly, you need to not only hire the right Realtor, but you need to price your house correctly from the start.
A lot of sellers are misled into thinking they should overprice their house. They think this will entice buyers to come in, make a low offer and then they can negotiate down to the amount for which they want to sell their house. That is a terrible strategy!
Pricing your house too high limits the numbers of buyers that are coming through your house.
60% of buyers come through when a house is advertised at fair market value. If you increase your list price to just 10% over fair market value, you reduce the number of buyers through your house down to only 2% of potential buyers. You are doing a disservice to yourself if you price your house too high. The price of your house will eventually be brought down to the correct market price, whether it is through price reductions or because the house doesn’t appraise.
Why does the number of buyers drop so significantly when you overprice your house?
Buyers are not looking above their means for a house they cannot afford. Buyers are not going to know that your house even exists until it drops into their price range. Also, a lot of buyers do not want to come in with a low-ball offer right out of the gate because they don’t think sellers will entertain it when the house is new to the market.
Price reductions can result in a lower sales price.
Your listing starts to get stale and peaks at 2 weeks. If you are not under contract by the end of your second week on the market, you will most likely be making a price reduction. The longer your house sits on the market, the lower the price will drop. At that point, you’ll be lucky if you can get fair market value. Unfortunately, you will probably end up selling your house for a little under what you would have received if you had priced it correctly from the start.
Potential buyers will be curious if pricing is the only issue with the house. They will begin to wonder if there are any other problems with the house. At the end of the day, you’re going to get a much lower offer and you are probably going to take it.
Multiple offers and bidding wars only occur when the house is priced correctly.
Since there are more buyers than houses right now, a lot of buyers are willing to pay more. So you have a chance of obtaining multiple offers on your house. In bidding wars, some buyers are even willing to get rid of contingencies (ex. Pay X amount over the appraised value, perform a home inspection for informational purposes only, etc.).
The key to selling your house is to price it correctly from the beginning.
This is a great market to be a seller, but don’t be greedy and overprice your house. Overpricing your house can reduce the overall sales price of your home. Pricing your house correctly will:
- Get you in front of the most potential buyers
- Give you an opportunity for multiple offers
- Benefit the seller because there is a limited inventory of houses