Price your home by comparing what houses in your neighborhood sold for, not what your neighbors are asking:
Too many times, sellers are determined to price their home while looking at the competition/neighbors. But what sellers fail to realize is their competition/neighbors may be completely over-priced. It happens all of the time. Sellers look at their neighbor’s house, which is priced at, for example, $300,000, and says, “Well … my house is much nicer than theirs, so I’m going to ask $320,000.” However if the neighbor’s home has been on the market for 45, 60, or maybe even 90 days at that price, the seller is going to be in the same position 45, 60, 90 days down the road. By focusing on the asking prices of homes in the area, it is extremely easy to over-price a home, which immediately misses the crucially important first two-weeks on the market when buyers’ interest is keenest.
Sellers need to focus on what other buyers have actually paid for houses in the neighborhood. That’s how to get the true market value for a home. It’s always best to price a home according to the true market value, and not the wishful thinking prices a lot of sellers attach to their properties.
Lose the fear that you are going to give your home away by under-pricing it:
In the current market, it’s almost impossible to under-price a house. On the flip side, as I mentioned before, it’s extremely easy to over-price it. If sellers put a price on their property leaving “room to negotiate,” it is likely they will have no negotiation. Why? Because buyers recognize value. If they don’t see value immediately – they pass the house by without making any kind of offer. Negotiating down is not really occurring in this market – except on properties that have been on the market a long time – more than 30 days. Today, a seller either negotiates with a fast-acting buyer, or stands around waiting for offers.
By missing those first 30 days, a seller is already headed down the price ladder. The questions in buyers’ and agents’ minds then become: “I wonder how low the seller will go?” “The home has been on the market for 40 days, there must be something wrong with it.” “Why would I want this house when no one else wants it?”
That’s what buyers begin to ask themselves – not exactly what a seller wants to hear. What a seller would rather have them asking is; “What is it going to take to get this home for us? We need to write an offer fast, before anyone else gets it, because this is a great value.” That’s music to a seller’s ears!
Time is the enemy of the seller:
When selling a home, the longer it’s on the market, the further away it will get from the original asking price. The greatest amount of interest and the highest price a home seller receives on their property occurs during the first two weeks it’s introduced to the market. That’s why pricing is so important. Potential buyers have been shopping in the marketplace for weeks, and they know as soon as a new home is put into the multiple listing system. They have immediate interest in all new property listings and know what value is based on their previous home hunting experiences. If your home is priced properly, buyers recognize it and make a really fast and strong offer, because they don’t want to lose out.
It doesn’t matter the price-point of the house, or what price range it’s in, the fact is, the shorter the time on the market, the higher the price a seller will get. Time is the enemy. Statistics prove in our current market, the longer a home is on the market, the less the seller will receive for their property.
If a seller selects a price toward the low end, there is a very strong chance the pent-up demand from potential buyers is going to cause multiple offers to come in, and in some cases, raise the dollar amount above your asking price. That is the point when the home is at true market value; when you have two, or three, or four, potential buyers offering relatively the same amount of money. As a seller, that’s when you know you’ve properly priced your house and received top dollar.
A certified residential broker, Paul Valentino holds the National Association of Realtors e-PRO professional real estate designation and is a member of the National Association of Realtors, the Virginia Association of Realtors and the Northern Virginia Association of Realtors.