A Story by Michele Kreinheder | Updated 07/28/2014 8:58am
What sellers should fear more than pricing their home too low, is pricing it too high. I know this is a hard concept to grasp and an even harder concept to live through but I implore you to take this advice to heart when it comes time to sell.
Pricing above Fair Market Value is probably the single worse move a seller can make, and this is true in all types of market conditions. The definition of Fair Market Value is the price the home will sell for on the Open Market. The definition of Open Market is that it is not closed to anyone. It follows that the more people that view the property, the quicker you will sell it at Fair Market Value and as an added bonus you will must likely end up with multiple offers giving you the upper hand when negotiating. And what is the best way to increase the number of eyeballs looking at the property? Pricing of course. I mean everyone is looking for a bargain, right? But just like everything in life you get what you pay for, which brings us back to the fact that your home will sell at Fair Market Value but with much less angst and pain on your end.
A common argument we hear from sellers is “I don’t want to leave money on the table.” I counter argue that the best way to avoid walking away with less money at the end of a deal is to underprice it, and again this rings true in all markets and all price ranges.
Let’s walk through the scenario of an overpriced home. The greatest interest in a home occurs during its first two weeks on the market. Serious buyers, which are exactly what you need, are extremely attuned to the fair market value. They have trounced through enough homes in the past few weeks that they can smell an overpriced listing from the curb. When a home is listed at a certain price, buyers expect to find a home suitable to that price range. So now you have brought in buyers who wouldn’t make an offer on your home because they are expecting more home and buyers who would have bought your home haven’t even looked at it because you have priced them out.
Realtors use 21 days as the rule of thumb for being the time to lower the price. Really in the today’s fast internet world and in this seller’s market, we know within the first 10 days if we have missed the boat on pricing. So at this point the price should be drastically lowered but many people are still afraid and reduce the price incrementally every few weeks. Next thing you know the house has been on the market for 60 days and the listing has become old and stale. I mean if you were a buyer wouldn’t you wonder why someone hasn’t bought the house yet. Doesn’t everyone want something that everyone else finds desirable?
Let’s now talk about silence. There is nothing quieter than a phone not ringing for showings. That anxious feeling multiples daily as the calls decrease. Now add to it the fact that every time someone does calls you have to clean your house to perfection, vacate it, then only to have the buyer take a five minute walk-through and leave. I know I am painting an ugly picture but I want to drive home the fact that overpricing should be your greatest fear, not underpricing.
Someone recently said to me that if you listed a house for a single dollar it would still sell at fair market value. I mean there are no rules to pricing, either high or low. Just because you say a price, it doesn’t mean you have to accept that price. The Multiple Listing Service (MLS) is a marketing tool and should be used as such. Pricing a property under market value opens up a world of wonder for the seller. Instead of a negative feeling of rejection your home is received positively. You will receive multiply offers and counter back confidently. (Read Case Study #614 for an example)
And let us not forget that some of the toughest negotiating is ahead of us. The physical inspection report often reads like a laundry list of horrible items that must be repaired as soon as possible. Many sellers wonder how the house hasn’t fallen down upon their heads with so many issues! If we have just one offer and nothing in back-up, you, the seller may feel more inclined to bend to the buyers’ demands on the request for repairs. If you had a offer in back-up position the buyer would be wary of overstepping with their demands.
So I hope I have convinced you of the importance of pricing your home correctly from day one. Once we have price determined, I have full confidence in my ability to bring you the best offer and negotiate it to your benefit. I excel at and help you with market preparation. I use the best photographer in the area to showcase the home and use these in a strategic online social marketing plan. Once in escrow my excellent team of professionals take you through the escrow process always with the goal to protect your interests while making it as painless and seamless as possible.
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