Your Birmingham Home Could Be Overpriced
In today’s market is it possible to price your Birmingham home too high? The short answer is yes.
Some people may argue that with the limited housing inventory, good demand, and low-interest rates, that you can price your home for as high as you want and it should sell. I wish this were true but to be honest it is not.
You see, buyers these days are savvier than they were years ago because they have access to a lot more information online. Buyers can see what else is available for sale and will not pay more for your home than they can other similar homes that are listed for less money.
Do Your Research
Buyers are doing their research so why shouldn’t you? Pricing your home based on emotion will get you nowhere. It will lead to the home being on the market for an extended period of time and potentially selling for less than what you could have gotten for it if you would have started off with a lower price in the beginning.
So how do you know if your home is priced too high? Today we’re going to take a look at some of the signs of overpricing and then we’ll look at ways to fix it so that your home is priced more in line with the market which will help it sell in a reasonable amount of time.
Signs Your Birmingham Home May Be Overpriced
If your home is currently listed for sale but you’re not getting any bites then that’s a problem. A lack of phone calls asking about your home or very little website traffic can be the first sign that buyers are passing on your home and going to other listings that are competitively priced.
Buyers pick out the most important criteria to them and then search for those homes that meet their needs. If your home is priced higher than other homes of the same size then your home may not be showing up in their queries.
Carrying this a step further, if you’re not getting as many showings of your home that is another sign. Did you pressure your agent to list it too high? If so then maybe they don’t have the confidence that they can sell it for the high price.
You also have to consider whether the agent encouraged you to list it for the higher price to get the listing. If so, the price may be scaring people away and that is the reason you’re not getting any showings.
Of course, if your home is not getting much traffic or showings it’s probably not getting any offers either. And if you are getting some offers here and there they may be a lot lower than the list price.
These signs are all signals from the market that your home may be priced too high. This is part of what I mean when I say that you should price your home to the market. This involves finding out what other similar homes have sold for and are currently listed at to see how your home fits into the value picture.
How To Fix The Problem And Price Your Home Accurately
You don’t have to get an appraisal to find out this stuff if you live in an active area where sales data is accurately reported. While the Zillow Zestimate leaves a lot to be desired in terms of its accuracy the Zillow website does provide good information about recent nearby sales and value trends in your area. There are also other public websites you can use to do the research but I mention Zillow because so many people are familiar with it.
The first thing you want to do is collect the most accurate information on your home. Find out the correct square footage so that you can narrow down your comp search to those that are similar in size to your home.
Accurate square footage is one of the most overlooked areas but is one of the most important pieces of information necessary for accurately pricing your home.
Use the bracketing method to choose sales comparables that are smaller, similar, and larger than your home. Analyze sales that are +- 25-30% smaller and larger than your home.
Look at what other similar homes are listed for that a buyer would consider along with yours. If there are any outliers you might want to throw out the properties that are listed for the highest and lowest price.
You can also look at the days on market (DOM) statistics to see how long it took to sell the comp. If a comp took longer to sell than what is typical then that will give you an idea that it was priced too high. In addition, looking at the final sale price to list price ratio (SP/LP) could add support to the long DOM. A lower SP/LP ratio will show that the price had to be lowered by quite a bit before it sold.
These are the actions you can take to find out if your actively listed home is priced too high but of course the best thing is to price it correctly upfront. I’ve heard that the number one reason a home will not sell is because it is priced too high and I can believe this.
As I said previously, you can do the research yourself to accurately price your home but if you would like the opinion of a professional you can always order a pre-listing appraisal.
Questions?
If you have any questions about whether your home is overpriced feel free to contact me. As always, thanks for reading.
Overpricing is a real problem and we are living in a time when many sellers think they know more than real estate professionals. I don’t say this to diminish the knowledge of sellers. I’m just saying with the advent of technology at their fingertips sellers have more information than ever and it’s only natural to rely on that information to a greater extent. However, my sense is buyers are doing WAY more research than sellers, which means sellers are often out of tune with the expectations of buyers and pricing. It’s ironic because one would think that more information would lead to more accuracy, but that’s not always the case.
I agree, Ryan. The thing about it is that even with all of the online information available there is still a disconnect with sellers about how their house may fit into the value picture. This is where the services of an appraiser come in. We are able to compare the property more realistically with the sales and make adjustments for differences. This will then give a more accurate indication of value for the property. The bottom line is that you first must have the data and then you need to know how to interpret the data.