Pricing Your House To Sell
You've decided to sell your home, you've searched the internet for listings in your area and you think you know the value of your home. But, everything you've has told you to get a price opinion from three Realtors. Each Realtor comes prepared with a "Competitive Market Analysis" and recommends a specific listing price.
Two of the Realtors have come up with prices lower than you expected and they show you the comps to back up their price. You, however, are convinced they are wrong and your house is worth more than the exact house two doors down. Enter the third agent. This guy says you are all wrong and the house is worth more then even you thought. You love this guy and are ready to sign on the dotted line. This is agent seems willing to listen to your input and work with you. This is agent cares about putting the most money in your pocket. This is agent is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everyone does it!
Think again! This agent has just pulled, what Realtors call "buying a listing." He "bought" the listing by suggesting you might be able to get a higher sales price than the other agents even though he may nor believe that at all. The intention from the beginning is to get the listing and then tell you that a price reduction is what is needed to sell the property. By the time you get to the price the other two REALTORS® suggested to start with, your house has been on the market a few months and is now a stale listing.
Why do agents "buy" listings? There are basically two reasons. A well-meaning and hard working agent can feel pressure from a homeowner who has an inflated perception of his home´s value. On the other hand, there are some agents who engage in this sales practice routinely.
If you start out with too high a price on your home, you have just added to your stress level, and selling a home is stressful enough. There will be a lot of "behind the scenes" action taking place that you don´t know about.
First you must understand how the process works. The listing agent does not usually attempt to sell your home to a homebuyer. That isn´t efficient. Listing agents market and promote your home to other local agents who do work with homebuyers, dramatically increasing your personal sales force. During the first couple of weeks your home should be a flurry of activity with buyer´s agents coming to preview your home so they can sell it to their clients.
If the price is right.
If you and your agent have overpriced, fewer agents will preview your home. After all, they are Realtors®, and it is their job to know local market conditions and home values. If your house is dramatically above market, why waste time? Their time is better spent previewing homes that are priced realistically. Plus, the truth is, that no one is going to spend money to market a house that they feel is over-priced.
Later, when you drop your price, your house is "old news." You will never be able to recapture that flurry of initial activity you would have had with a realistic price. Your house could take longer to sell.
Even if you do successfully sell at an above market price, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last six months and current market conditions do not support your sales price, the house won´t appraise. Your deal falls apart. Of course, you can always attempt to renegotiate the price, but only if the buyer is willing to listen. Your house could go "back on the market."
Once your home has fallen out of escrow or sits on the market awhile, it is harder to get a good offer. Potential buyers will think you might be getting desperate, so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received.