The Perils of Over Pricing Your Home to Sell
“I Don’t Want To Give My Home Away!”
In almost every conversation I have with potential sellers, the conversation begins with the line “I’m not going to give my home away!!” Despite comparable sales that clearly show a lower market value, sellers often resist lowering the price. However, in order to sell, you have to price your home at an amount that will sell.
Market valuation is determined by what buyers are willing to pay. The price that buyers are willing to pay is primarily based on the asking and sold prices of alternate choices. If a buyer can buy a similar home in the same neighborhood for less, they will choose the alternative. In addition, in order for the home to be financed by the buyer’s lender, the sales price must be supported by the appraised value (value indicated by comparable sales).
You are not giving your home away if you sell it at market value. However, you can be guilty of giving away some of your price if it is listed too high. If you insist on initially pricing your home higher than the market value, you give away some of your price because over time buyers lose interest. They view homes that have been on the market longer with a perception of declined value. In fact, small incremental price changes often result in homes being sold at less than the original market value. As a seller, you want to capture buyers at the peak of interest. This is usually the first few weeks on the market.
You also might be guilty of giving away a little bit of your price when your home is not presented well. Exterior curb appeal and a nice interior help your home stand out in any market. Although the current market has a tighter inventory of homes, buyers can still be picky. This is a big investment for buyers. Most buyers prefer a home that is in better condition so a little sprucing up helps in marketing your home. Also, with the internet, many buyers will drive by the home before requesting a showing. An unappealing exterior view will stop some buyers from asking to see the inside.
Interior Pictures Matter
Finally, you may be giving away some of your price if you don’t allow interior pictures. Most buyers start on-line and interior pictures are a big part of marketing your home on the internet. It is documented that homes with few or no pictures are not clicked on (viewed) as often as those with more interior pictures. Buyers and even some agents assume that a lack of interior pictures is an indication of problems with the condition of the home. They never even request the showing to see how lovely your home actually is. You want your home properly marketed in the place where buyers are looking.
Past Improvements Matter Some
For those still focused on the costs of past improvements and projects of their home, you just have to let go of the idea that you will get a dollar for dollar return for those past expenditures. Actually, in most cases, you never get a 100% return of your costs. What those projects will do is make your home more attractive to buyers. Also, homes in a better condition or with upgrades will be comparable to other updated homes that have sold. Updated homes usually sell at a hgher price in the value range for your neighborhood.
As a seller, you are marketing a product. Put yourself in the shoes of a buyer. Based on the available choices, would you pay what you are asking for??