When homeowners are preparing to place their properties on the market, one aspect looms large in their minds: money. And it should. Setting the asking price accurately can mean the difference between getting an offer quickly and having a house languish for months, accruing days on the market and drawing little interest.
How do you block out the noise that often surrounds the intricate art and science of pricing? How do you separate fact from fiction? The question can cause you to lose sleep. The truth?
1. If we keep waiting, a better offer will come along.
Occasionally. When sellers receive an offer from the first showing, they may be skeptical or hesitant to accept it. Would other prospective buyers be inclined to pay more? Thoughts of bidding wars can cause sellers to want to wait and see. There’s no guarantee other would-be buyers are waiting around the corner. If the offer is fair, entertain it. Consider the time, mortgage payments, and inconvenience involved in keeping your home on the market.
2. Getting an offer right away, means the agent priced it too low!
An offer early on in the process may provoke the questions, “Should we have asked for more money? Did our agent price it too cheaply?”. It’s natural to be skeptical, but receiving an offer quickly most likely means your home was priced accurately and attractively. If you trust your agent (and read my book), you know he or she didn’t pick a number out of the sky. It’s based on extensive market research and discussed at length prior to signing your agreement. It’s an occasion to celebrate!
3. We should price it so there’s room to negotiate.
Sellers – and their agents – want to get top dollar. But overpricing it with the intention of being willing to accept a lower offer may leave you empty handed. (It’s explained in my book) Plus, if you have to drop your asking price multiple times, buyers may begin to wonder what’s wrong with the property — other than the price, that is.
4. That’s not what my Zestimate says it’s worth!
I love Zillow. But have you ever noticed how homeowners are eager to believe Zestimates or other automated valuation models (Even my Bestimate can go wide of the mark!) when that price exceeds their expectations? Yet, when the opposite happens, they assume it’s outdated or erroneous information. Did your agent use the 2-step process to prepare your estimate of value? (Have you read that part of my book?) Don’t do your home a disservice by asking it to yield more than the market will bear.
5. We can add all renovation costs to the asking price!
No. Yes, you’ve made improvements. And the upgrades look great! But remember, not every change is going to land a huge return on investment. If you’re curious about the value added, check out Remodeling Magazine‘s annual ‘Cost Versus Value’ report. You’ll find which upgrades yield the biggest bang for your buck. Also, as you’re making changes, bear in mind that the infinity pool you view as an asset may just seem like a huge liability to a buyer. Perspective is everything.
6. My Realtor® overpriced my house to make a larger commission.
Agents are paid a percentage of the selling price of the home. However, even if they were to raise the ask by $25,000, that might yield an additional $1,500 in commission, to be divvied up between with agent’s broker and the buyer’s agent, leaving your agent to realize an additional $750. It’s hard to imagine an agent would blow the possibility of a quick sale — and take on weeks or months of additional showings and marketing expenses — for a few hundred dollars. It’s not logical.
7. Reducing the price is a sign of weakness.
Definitely not. It’s not about being eager to drop the listing price. It’s about constant evaluation of all the data available to you. If time has passed and interest is waning, talk to your agent. Ask for an updated CMA. The market changes. (Seriously, ask for my book.) Remember, time is money. While you’re waiting for someone to meet your price, you’re still paying the mortgage, taxes, utilities, and insurance etc. Plus, lowering the price (even a small amount), may put your home in front of a new group of buyers. This translates to increased interest and an opportunity to negotiate the price closer to where it was in the first place.
Call anytime I can be of help.