When it comes to real estate home pricing, it’s important to understand the local “market mentality.”
Real Estate markets are local.
This means that even though there are national market trends, your local real estate market may be different.
Take Vancouver, Washington for example. Currently there is a shortage of available homes for sale making this a “seller’s market.”
In a seller’s market, sellers are likely getting top dollar for their homes. However, there is still a point at which the market will reject a price no matter how stellar the home.
Finding the sweet spot in home pricing is ideal, but how does one find that spot?
Here are a few pricing mistakes that sellers should be aware of when putting their homes on the market:
First and foremost, no matter how brilliant the marketing plan of your agent and his/her company, there is no marketing that an overcome overpricing. The pricing of the home is considered by the real estate industry to be the most important part of the marketing.
According to leading real estate marketers, pricing accounts for up to 90% of the marketing plan!
Some sellers and agents believe that overpricing a home will leave some “wiggle room” for buyer’s to be able to negotiate. This can lead to market stagnation and market rejection. In addition, an overpriced home usually helps to sell all of the homes in the neighborhood that are priced more in line with the current market conditions.
Don’t be the seller that gets overlooked because of overpricing!
Homebuyers have access to many market facts including the average price per square foot in a particular area and for a particular type and age of a home.
If the average price per square foot in an area is $195 and your home is priced at $230 a square foot, it may get passed up on the buyer shopping tour.
Real estate agents will typically do a market search for their buyers and give them a list of comparable homes that have sold to help with their offer price.
Left on the market long enough, market stagnation sets in on an overpriced home and then people start to wonder things like, “what’s wrong with that home, why hasn’t it sold?”
Beware of real estate agents who will tell sellers their home is worth much more than market value just to get the listing! Though it might feel good for the moment to think your home is worth so much more than you thought, in the end this is a huge disservice and can lead to a lot of frustration.
A quality real estate agent knows the market well and wants to serve his/her clients by helping sellers get the highest price in the lowest amount of time and helping buyers get the best home for the best value.
Interviewing agents is a great way to get a consensus on pricing. Agents should give you a range that homes are selling for in your area and that range should be based on concrete market research.
It is also not advisable to overprice a home because the seller is “in no hurry.”
An overpriced home is an overpriced home no matter the eagerness of the seller to sell.
Have a look at this article titled 8 Reasons NOT To Test The Market With Your Asking Price.
It has been our experience that an overpriced home will just sit on the market longer and eventually the seller will either give up and take the home off of the market or the seller will drop the price.
Just be aware that buyers are watching the market! If they see a home has been on the market a long, long time and then see a sudden price drop they are likely to assume the seller is now motivated and may be willing to take even less than the new asking price.
It’s all about knowing and understanding “market mentality.”
Market mentality is not something you can glean from a website tool like Zillow's "Zestimate." Market mentality is a “knowing” of the market and how the market reacts to different conditions.
Having an insightful, professional real estate agent who understands the market will help you avoid common pricing mistakes while helping you get top dollar for your home in the least amount of time with the least amount of fuss.
When you are in the market for a professional pricing opinion, contact us and we’ll work hard for you!
In the meantime, be sure to check out our Market Insider page on our website so you can monitor what’s happening where you are or where you want to be!
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Ron and Sherry Patterson