So, you have finally decided that now is the time to sell your house. Before you put your house on the market, please read this blog about the pitfalls of overpricing your home.
Most people want the best price for their homes. Ok, you’re right, everyone wants the best price for their homes! But research shows that if you overprice your house by just 10% it can sit on the market for as much as 6 months longer than a house that is priced right. Before you jump in there and say, “But, we’re not in a hurry to sell, and when we are, we can reduce the price”. There are more serious issues involved than your house just sitting there.
Firstly, estate agents don’t work as hard on overpriced houses as they know that their buyers will not be interested in looking at them, and if they do look and even put in an offer, the offer will be so low as to be insulting to the seller. In most cases, however, buyers do not make offers on overpriced houses.
Secondly, most buyers are educated about the value of property at the time that they are house hunting. In fact, I would go as far as to say, they are the experts on property value. They know what a property worth $300 000 should have, and if your home does not measure up on paper, they won’t even bother looking. You therefore lose the buyers before they have even seen your house.
Thirdly, overpricing helps the competition. What competition? Well, the other homeowners who are trying to sell their houses. If your house is overpriced, the buyers will snap up the cheaper houses thinking they are getting a bargain and you will be left high and dry, with no one to come and view your house, as all the buyers in that price range will have bought cheaper homes.
Another point to remember is, when you eventually do realize that you need to lower your price, the house will have become stale. The buyers will ask themselves what is wrong with the house if it has been on the market for this long and now the price has dropped. You will lose buyers again, as no one wants to buy a white elephant. Stale listings have a negative perception in buyers’ minds, even once the property is on the market for the correct value.
In my experience, I have found that most overpriced houses end up selling for less than the lowest price the seller was initially prepared to accept or even less than the Estate Agent valued it at.
Before you list your property do some research. Buyers are forced to do research in the course of their house hunting. Studies shows that buyers view between 10 and 15 properties in their price range before buying. Sellers should look at other properties on the market too. You should also seek professional help from Estate Agents. It is probably best to get 3 market appraisals.
In the Real Estate Industry this is called “Buying a Listing”. Some agents believe that by giving you a high value for your house you will list it with them. But always keep in mind, the estate agents give you nothing more than a GUEstimate when they value your house. Estate agents don’t determine prices, buyers do, and as already discussed, they know the true value of a property. Just as you want the best price for your house, they want the best house for their buck!
Another point to consider about agents who “buy” listings is that most buyers know who these agents are. They rarely go to them to view houses. So be sure to choose a reputable agent who has a fair understanding of market trends and will give you the best advice.
Oh, but wait! What about those mythical buyers you have all heard of, who pay hundreds of thousands of dollars over the asking price or value of the property because they love it so much. Well, they are just that: mythical. You are as likely to see a unicorn in your back garden or find a pot of gold at the end of the rainbow, as you are to find a buyer uneducated enough to pay more than a property is worth.
So remember, more tends to result in less, and less can sometimes result in more. If you place your property on the market at the correct price, you are likely to end up with more money in your pocket, than if you list it at an inflated price.
And for those of you who are still not in a hurry to sell, then either delay putting your property on the market, or put it on the market at a realistic price and only accept offers at that price.
