Overpricing is a trap that many inexperienced home sellers fall into, and it is by far the single most important element in extending the time a property spends on the market.
What these sellers don’t realize is that overpricing a house not only permits it to sit on the market for an extended amount of time, but it also pushes purchasers to rival properties. By overpricing a residential property, you are assisting the very residences with whom you compete for your client’s funds.
Emotion is a major motivation for sellers when it comes to estimating how much money they expect to get from the sale of their house. Of course, this is your home, and it has most certainly been for many years. You’ve made significant improvements and modifications to it to suit your preferences and needs, and you’ve spent a lot of money on maintenance and repairs. You may believe that you are justified in asking the amount you want since the house is worth that much to you.
Do Not Repel The Pool Of Buyers
Unfortunately, every residential property is only worth what the market will pay for it, nothing more. Overpricing your house will make it the pariah of the neighbourhood, as potential buyers will avoid it in favour of other homes in the same price range but in better condition and with more facilities, or properties very identical to yours but listed at a lower price. Rejecting this vital group of purchasers is a costly error that many sellers will live to regret.
One of the rashest real estate selling philosophies is to overprice the property and then lower the price to attract attention. That simply attracts the wrong kind of attention since it implies that you are desperate, causing some purchasers to feel that there must be something wrong that you are attempting to conceal.
Buyers May Not Be Able To Qualify For Overpriced Homes.
Why Should You Buy a House? You should also keep in mind that if you locate a buyer willing to make an offer close to the overpriced listing price, the transaction may fall through since the overpriced property cannot possibly appraise for the price you have arbitrarily established. This can radically alter the ratios that the bank feels comfortable financing to that specific buyer, converting a guaranteed mortgage funding into a turn-down.
A property that is priced even a few percentage points above its true market worth will tend to sit on the market for an inconveniently long period of time. The amount of overpricing and the length of time the listing is on the market have a very straight exponential relationship. A house that is 10% above market value will typically take four times as long to sell as a house that is 5% above market value.
At the other end of the listing spectrum are underpriced residential homes, which are typically distressed or arise when the seller is really driven to sell the property fast, whether due to an upcoming relocation out of town or a family situation.
The Price Is Determined By Comparables
Not only is location, location, location important, but so are comparables, comparables, comparables. Your expert, trusted local real estate agent can do a thorough review of all comparables in the region and then offer you with hard data on what comparable properties are selling for in your neighbourhood.
The best method to price a property is to carefully consider the advise of a seasoned, reliable realtor with years of experience in selling your type of home in your region. You’ll be moving soon if you price your residential property fairly!
