We often hear from sellers, “let’s just try it at the higher price”. By doing this, can cause frustration for the seller and for the listing Realtor. Although sellers sometimes may feel that the listing Realtor is just trying to list it low, and sell it quick, that is to the contrary. When a listing is overpriced, it often gets little to no attention in terms of volume of showings, or even quality of showings. The reason for the lack of showings is because buyers are now more informed than ever when it comes to knowing prices. There is so much information on-line in terms of being able to scan all listings in the area, and really getting a feel for the competition in the area. Now, of course, as a seller you can do this too, but let’s face it, because you are comparing your home, you feel it is superior to most or all of the competition that you see. It’s human nature, as a seller you feel your property is worth the most possible, and as a buyer you feel the property that you’re looking at is not worth what they are asking. That’s where a Realtor comes in to bring both buyer and seller to a common ground. So, let’s get back to the subject. As a seller, you want to avoid having your listing on the market too long. The longer it’s on the market, it becomes stale, buyers start asking themselves, after viewing it multiple times on-line, “I wonder what’s wrong with that house”. This is what you, as a seller want to avoid. You probably will have to reduce the price anyway to encourage buyers to come and look at the house. Then, maybe you will be lucky enough to finally get an offer, it will probably come in much lower than you would like. From the buyers point of view, they are thinking, this house has been on the market for a long time, and they have reduced the price. Nobody else has stepped up and gave them an offer, so we will offer lower and see what happens. From that point, as a seller, you are struggling through the negotiating process trying desperately to keep the price at an acceptable level.
The alternative to overpricing your house, is to price it right on market value or even slightly below. If you watch how banks list properties when taken back under power of sale, you will notice that they are priced right at market value based on Realtors opinion and an appraisers opinion. When a power of sale listed property hits the market, there is usually a buzz around it, meaning a lot of interested people. Why, because it’s listed at a reasonable price. Also, banks will usually state that they will not look at offers for one or even two weeks after it hits the market. They do this to allow as many people as possible to view the property and have an opportunity to submit an offer. This will many times, create multiple offers, driving the price up. As more offers are submitted, buyers are notified of how many competing offers there are, and then can decide if they would like to improve their offer before the bank reviews all offers. Many times this forces the sale price to be higher than the listed price.
So what can we learn from this technique? If you list your house at the recommended market value, you will set yourself up at the best chance of selling it in a reasonable amount of time, and at or maybe above market value. When this happens, stress levels are much lower for you as a seller. You are spending less time worrying about when the next showing will be, and blaming your Realtor for why there are little to no showings, and you are spending more time looking ahead to where you are moving to next. Before you list, decide which scenario you want to go with before setting your list price.