What are the top reasons to price your home accurately?
In study after study, it is proven that one of the biggest reasons for a home not selling is that it is overpriced. An overpriced home typically sells for less and takes longer to sell, so who wouldn’t want to price their home accurately?
It is important to price your home accurately from the start, and the best way to do this is by getting a pre-listing appraisal. A pre-listing appraisal will compare your home to other recently sold homes as well as current active listings.
After all, won’t buyers be looking at other homes for sale in your area? So why wouldn’t you want to consider active listings in your pre-listing appraisal?
Since pricing your home too high is one of the biggest reasons for a home not selling let’s take a look at what can happen when you do this.
1) An accurate price will help it sell quickly- During an appraisal assignment, one of the statistics we look at is the days on market (DOM). This stat is a measure of the number of days it takes to sell a home from listing to contract.
If the home price is set too low it will sell quickly but you will likely leave money on the table. Setting your price too low usually does not happen very often unless you are super motivated because you are in a hurry to sell. This can happen during a situation like a divorce case or maybe if you’ve bought a second house and don’t want two house payments.
The price should be set at a level that will sell the home within the DOM range of other homes in the area. This will maximize the amount of money you get and minimize the time on the market.
2) An accurate price will not turn people away- Buyers in today’s market are very savvy. With the amount of data available online, buyers are very knowledgeable. Information on other available homes, their prices, and interior photos are available for buyers to compare against each other.
If your home is priced too high buyers will know it immediately by comparing your home to the others. Your home needs to be priced so that it competes well with other homes that are similar in location, age, style, features, and condition.
3) An accurate price will help it sell higher- Studies show that if a home is priced too high at the beginning it can end up selling for a lower price than if it was priced correctly to begin with. When a home is overpriced it can take longer to sell because buyers will see this and pass it up.
After the home is on the market for a while without selling, most agents and sellers will lower the price. This can look as if the seller is desperate and most buyers will pick up on this and make offers that are below market value. Many sellers will be so ready to sell because they want to move on with their lives that they take the lower offer.
4) An accurate price will help it compete better- Remember what I wrote earlier about an accurate price not turning people away? When priced to the market your home will complete better because buyers will see that it in the same price range as others that are in the same area, similar size, age, style, features, and condition.
Most buyers know exactly what price range they can afford. Whenever they do home searches within this price range your home will look much more attractive to them if it is similar to the others, and this will make it more competitive.
5) An accurate price will not sabotage financing- The appraisal is usually one of the last things to be done in the home buying transaction. I have seen situations where everything was going well until the appraisal was completed and it came up short because the sales did not support the contract price.
The list/contract price has to be based on more than what the seller wants to get out of their house. It has to be based on what the market shows other similar homes are selling for. If it is priced accurately from the start, based on market data, then the likelihood of the deal falling through because the contract price was too high is diminished.
The old strategy of pricing your home high and then lowering the price if it doesn’t sell is not smart in today’s market. You have to price your home accurately from the start or smart buyers will pass on your home and move on to other sellers who have done their homework. Which type of seller do you want to be?
Do you have anything else to add? I’d like to hear your opinion so leave a comment below and as always, thanks for reading.