Realtor Realities: Pricing your Home Correctly the First Time is Critical

Lydia Taylor June 1st, 2007

One of the number one factors that hinders a home from selling is overpricing. I know that you have heard that selling your home is all about “Location, Location, Location.” They are right. And there is nothing you can do about your location, so make sure the price reflects where you are. Ask your agent to provide you a detailed market analysis of your area, and have them sit down with you to review it. This will generate a reasonable and accurate listing price for your home.

It might seem like a good idea to price your home high and reduce the price as needed, however this is probably the worst decision that you can make as a home seller.

A high price produces fewer showings and fewer prospects. If your home is listed for several thousand dollars more than any of the other homes in the neighborhood - and is of the same make and quality - then your home will not be on buyers’ lists to see. If they can buy the same thing for less then they will… Most will not even bother to look at your home.
Over pricing can impart a negative image to the home. If the home sits for an extended period of time - and especially if you reduce the price - people instinctively think that there must be something wrong with the home. That is a hard and nasty image to overcome. It’s a long road for a seller once that happens.
High pricing can hinder financing. If the home appraises for less then the proposed sale price, the bank will not lend the money! Unless you were lucky enough to find cash buyers. Otherwise your buyers have no choice but to walk away since they cannot get a mortgage. What a bummer that is, huh?
Over pricing typically means more seller concessions. Let me rewrite that. Overpricing means YOU make more concessions. To make the purchase of the home worthwhile, buyers will begin to ask for you to pay more closing costs, decorating allowances, etc. The extra money you had hoped for will be eaten up by these types of requests.

All in all, over pricing leads to wasted time and energy!

Putting the right price on your home the first time is essential.

When your home is priced ‘correctly’ it makes for a faster and easier transaction. Fair pricing means less time that you have to deal with mortgage payments and ownership costs. Buyers are also more likely to offer near the asking price because they realize that if they do not - someone else will. The combination of less time on the market (carrying costs) and better offers translates to more money in your pocket.

Pricing in line with your home’s market value means that you will sell faster and that cuts the time that you have to keep your home show ready. It makes no sense to overprice your home.

Beware of Realtors that are ready and willing to put a high price on your home. They will use that in their sales pitch to convince you to sell your home with them and beat out other agents for the listing. One agent in the area got over 120 listings in 2006 doing exactly that. They are on pace to beat that this year. The faded signs in peoples yards are called by some “The ******** Effect.” For obvious reasons I’ve withheld this agents name, but if you think agents like that are really that good you will definitely be disappointed. They are not looking out for your interests- they are just using you to make a buck.

You can shop realtors just like anyone else. Meet several of them. Talk to them. Interview them. Ask for a market analysis and see what their suggested list price is. If you have an agent that just can’t seem to really justify that high list… don’t get greedy. You’ve found one to avoid.