By Tom Horn on May 15, 2019 06:45 am
Years ago this way of thinking may have been more successful but in today’s world of big data, it is no longer valid. Buyers have too much information at their fingertips to make uninformed decisions.
Most buyers these days know where to look to find out what homes are selling for. They can go online and see what the homes look like, what features they have, and whether they’ve had any updating.
With this information, they can then determine whether your home is overpriced. If it is then they will go on to the next one and you’ll be stuck with a stale listing that will sit on the market until the cows come home.
If you’re unsure whether your home is overpriced you may want to consider these five signs. If you decide that it is then you’ll want to consider adjusting the price based on what the comparables indicate.
Let’s look at what you can do if your home is overpriced.
1) Buyers aren’t looking at your home- Most buyers will weed out the homes they are not interested in looking at because they don’t have the time to waste. If their research shows that your home is overpriced they won’t even consider it.
If you want to sell your home you need to get buyer’s eyes on it and the only way to do that is to make it competitive with other listings. You do this by pricing your home to the market which means that your list price is based on recent sales and current active listings.
You can do this by either having a real estate agent perform a CMA or you can get a pre-listing appraisal from a qualified local appraiser. Doing this will also reduce the chances of the home not appraising when you do get a contract.
2) Buyers are only making low offers- If buyers have found through research that other homes that are similar in age, size, quality, and updates to yours are selling for a lower amount they might respond by making an offer that reflects this. If this is happening then you should consider doing some research to see if this is reasonable and if so adjust the price on your home.
By ignoring this you run the risk of your home sitting on the market for an extended period of time which could stigmatize it with buyers.
3) Your home is priced higher than other similar homes in your neighborhood- Duh, right? This is a no brainer but still, some sellers are guilty of this. If you come up with the list price of your home by either looking at how much you owe on it or how much you’ve paid for improvements this may result in pricing it higher than others in the neighborhood.
Cost does not always equal value and market value is not determined by how much you need to get out of your home. If the value you come up with is higher than what other similar homes in the neighborhood are selling for then your price may be unrealistic.
By looking at what the other homes in the neighborhood are listed at you will get a better idea of what you should price your home at. By being competitive with these other homes you will have a better chance of getting buyers to consider your home and not passing it over.
4) Your home has been on the market for a long time- I recently wrote a post about the Days on Market (DOM) statistic. You can read more about it in the original post but it is basically a measure of how many days it takes to sell a home from the day it is listed until it goes under contract.
If your home has been on the market for longer than what is typical for the area then it could be overpriced. If something is not done quickly to adjust the price then potential buyers will think there is something wrong with the property and this could prevent it from selling.
5) Other homes in your neighborhood are selling- If there are other nearby homes that are similar to yours and they are selling then this could be a sign that your home is overpriced. When everything is basically the same between properties the lowest priced one will typically sell quicker.
If your home has positive features that you can show with market data will help it sell for more then this data should be part of your marketing strategy. If buyers do not see a difference between your home and others then it will be extremely hard to “sell” them that they should pay more for it.
It’s very important to make sure that you establish an accurate list price up front. If this is not done then you face the possibility of falling into a pricing spiral that you may not recover from.
I have seen situations where a seller would have been better off pricing the home lower from the start because the home would probably have sold for more than what it actually did.
The biggest reason a home will not sell is that it is priced too high. Doing your homework upfront to determine a market supported list price is the most important thing a seller can do.
Source Tom Horn https://