Facing Facts : The Market Value of Your Home
So you have finally decided to sell your house. This can be an emotional time as a house is more than just four walls, it is a home. But the minute you make the decision to sell, you must set all emotion aside. You need to tune into the real estate market and face the facts regarding home values, yes, even yours. If you truly intend to sell, then setting a competitive price for your home is crucial to a successful sale.
The 5 Perils of Overpricing Your Home
The the first and most important step in the sales process is setting a price at which a house will sell. Pricing the home correctly is supremely important and the price you set will determine your sales experience and the ultimate outcome. If you overprice your home, you are putting your entire enterprise in peril and below are 5 reasons why.
Peril # 1 – Scare Off Qualified Buyers
Your home may mean something to you, but it doesn’t hold that same meaning to buyers. Most buyers have a Realtor® with which they are working. A Realtor® is equipped with the data and the knowledge to help home buyers discern houses that are overpriced. Even if they are not working with an agent, there is enough data available to the public that any buyer can easily figure if a property is overpriced or not.
The first offers you receive are usually the best offers, but if you price your home too high you may not get any offers at all. The compound effect of this is that your property will accrue more Days on the Market (DOM) which may continue to deter buyers and/or give buyers the impression that something is wrong with the house, consequently inviting lower offers.
Avoid scaring off qualified buyers, do not overprice your house.
Read also : Selling Your House : The Price is Right
Peril #2 The Right Buyers Won’t Find You
Buyers have a budget that they use to delineate the houses they will look for. Based on that budget their Realtor® creates a list of properties which is sent out to them via email. Some buyers also look online for properties, but they still use their budget to define the terms of their search.
If the homes in your area are all selling for less than $400K then your home is probably worth less than $400K too. If you price your house above $400K, say $450K, actively looking, qualified buyers will not even see your house in search results.
So now, you are not scaring off qualified buyers, you are simply not attracting them at all! When you overprice your home, it is hard to know how many opportunities you will miss to sell it in those critical first days on the market.
Peril # 3 – Attract the Wrong Kind of Real Estate Agent
Real estate is one of those industries that abounds with unscrupulous individuals. As a result, those of us who strive to work hard and provide are clients with the best real estate experience possible are tarnished by association. As a seller you need to be able to tell the good from the bad so that you don’t end up making a deal with a devil.
The Wrong Agent
You may be a prime target for unscrupulous agents if you do not embrace the fact that your house is worth less than you would like to admit. By not being realistic about price you are unwittingly trusting these shady shysters with the sale of one of your most important assets : your house.
An unscrupulous agent will tell you what you want to hear about the value of your house not what you need to hear. They will build up your expectations and will not deliver the results you expect. They will do this for a couple of reasons.
The first is to eliminate the honest competition and lock you into a listing agreement. The second reason is that once you are locked into a contract with them they can now, exclusively, use your house as free advertising venue to attract buyer clients.
Selling your home is not a priority for them. In fact, the longer it lingers, the more free advertising they get. Just before the listing is about to expire they may suggest a price reduction to finally close the deal and make their commission.
Avoid the mistake of hiring an agent because of the list price they suggest. No matter what they tell you they cannot sell your house for more money than it is worth based on the market.
The Right Realtor®
On the other hand, scrupulous real estate agents are in business to help you sell your home, sell it within a reasonable amount of time and for the highest price that the market will permit.
It is easy to figure out who those agents are. These agents tell you what you need to hear about the value of your home, given the reality of the market. The conscientious agent wants to succeed in the endeavor of helping you sell, not fail. They pride themselves on offering outstanding service and expected results. So if you want the right results, choose the right Realtor®.
Peril # 4 – DOM (Days on Market) Can Doom the Sale of Your Home
The longer your home stays on the market the staler it becomes. Ideally a home should sell within the first 30 to 60 days on the market. Any longer than that and buyers start to wonder why it has been on the market for so long.
When a buyer makes an offer on a home that has been on the market for too long, it is often based on this fact. These twilight offers are generally not as good as if the home had been priced right in the first place.
The longer your house is listed for an inflated price the greater the chance the listing will expire. If your listing expires you will have earned the inglorious real estate scarlet letter “E” and will be back at square minus one.
Even more perilous though is the fact that you have lost time and perhaps the opportunity to best capitalize on the sale of your home. If your house spends 6 months on the market and the market shifts, there is no turning back time to regain the chance to sell it for the best price possible.
Peril # 5 – Epic Fail : Your Home Does Not Appraise
For a second let’s just imagine that you have beaten the odds and found a buyer for your overpriced home. Unless they are paying cash, it has to appraise at the agreed upon sale price, or it is highly likely the deal will fall through.
If the deal falls through you will have to start all over again. And even worse, depending on the type of appraisal, for example FHA, it remains valid for 120 days – that is 4 months! So whether you like it or not you are going to have to either come down in price or wait until the appraisal disappears. If you wait it out, you risk being the casualty of a market shift that could adversely affect your sale price even more (See Peril #4).
The remedy for an overpriced home is simple, price it right. You can accomplish this in one of three ways:
- Do your homework and objectively look at home values. Although you can do this, I don’t recommend it. Consult a professional as they are trained to take several factors into consideration that may not be obvious to the inexpert seller. Most Realtors® are happy to provide you with a Comparative Market Analysis (CMA) for free. Just remember to ask a principled Realtor® for help!
- Find a good Realtor® that will do the work and help you determine a fair market value for your home.
- Hire an appraiser.
If you face facts and price your home correctly from the start, you will be able to sell it and avoid the pain and peril and that comes with overpricing your home.
Désirée is a licensed Florida Realtor and Real Estate Influencer committed to a high-level of professionalism and to helping others with their real estate endeavors through education. Désirée Ávila was an award winning teacher for 10 years and has a doctoral level education in Educational Technology. Désirée is a lifetime local resident of South Florida and is fluent in Portuguese, Spanish, French and Italian.