The most important factor in selling your home for its maximum potential sales price is pricing it correctly, to begin with, when it first goes on the market. This is a statistical fact. The most showings for your home will occur in the first 2-3 weeks of your listing (also a statistical fact). This means the majority of potential home buyer opinions regarding your property will be set during those first, very critical first weeks.
Let me say this again, the single most important thing you can do to create the best opinion of your “for-sale” property is to price it correctly, out of the gate (not below, and not above true market value).
Of course, if your home is priced too low, you will leave money on the table and we certainly don’t want to do that, but, if you price it too high, especially more than `10% above market value, you most likely will not sell and you will probably get very few, if any showings.
I’ve had many seller/clients tell me that they want to start higher than market value and “explore” a higher sales price for their home. They say this is their “negotiating tactic”, giving themselves “room” to come down (if necessary). They assume that the buyers will still come see their home at the inflated price, and if they like it, will simply offer less. Then they will negotiate. Please do not do this! Not only does this not work, it creates a vacuum of “no showings” during the critical first few weeks when traffic is strongest and first impressions are made.
Why doesn’t it work, you might ask? Because there are agents like me, representing buyers like yours, and there are many, many homes for sale similar to yours. Their agent will advise them that your home is priced too high, and yes, sometimes it might be because you hope to negotiate, however, some people just think that their home is worth more than market. If that’s the case then you’re going to be a very difficult person to do business with and why should a buyer sign up for all that bother, when they can find the same (almost) home priced correctly and get a deal right away.
So, how does a homeowner come to think their home is worth 10% more than the next one? Many home owners become personally attached to their homes. They have designed the interiors, landscaped their dream yards and feel a great deal of pride in their creation (as well they should). I have a very good friend whom I’ve known in the corporate business world for many years who recently called me for Real Estate advice, selling his home in Telluride, CO. He had installed a sound proof movie theater in his home at a cost of many 10’s of thousands of dollars, and he was upset that his agent would not add the theater investment cost onto the market price of his house. I explained to him that in order for that home theater to be worth a lot of extra money, the buyer would have to perceive the same value in it that he had, and be willing to pay a lot more money for it. Not likely.
Now for one last piece of information regarding setting your initial price too high. It will, most likely drop your final selling price from what it could have been by significant %, perhaps as much as 10% lower. What! Yes, the very opposite of what you had been trying to achieve will most likely happen. There have been many studies done on this phenomenon. One theory is that properties that don’t sell and linger on the market produce a “what’s wrong with this home” effect. A second theory is that buyers looking at homes that have been on the market for a long time begin to believe that they can offer less because the seller is bound to be a little desperate. Regardless of reasons, the statistics say that the longer the home goes without sale, the lower the eventual selling price.
Here is a quick analysis from a friend/Realtor on this trend:
“McEnearney Associates of McLean, VA, said homes that sold in August 2015 within their first week on the market sold for an average of 2.08 percent above list price. Homes that lingered on the market for four months sold for an average of 11.53 percent below their original price”
That’s a net loss of 13.61% of sales price.
Of course, there are many other factors that impact price and time to sell. Condition, location and the surrounding market. But price is # 1. If you were buying, wouldn’t that be your number 1?
Your agent can and will guide through the process to achieve your homes best, “out of the gate price”. Please be sure to find an agent you trust. The risks of setting your own price simply are too great!