When I speak with a potential home seller, the obvious issue that comes up is price. I feel that, in the process of the sale, there are really three prices involved: The list price, the selling (contract) price, and the appraisal price. In an ideal world, all three of these are the same. It doesn’t happen nearly as often as we like.
In my opinion, the list price is the most important. Of course, a seller wants that to be as high as possible. As an agent, I want the house to be listed at a price that gets potential buyers in the door. Yes, this can be a little higher than the expected sales price, but not by much. It is vital not to overprice the house. Here are some reasons:
First of all, a savvy buyer’s agent will be able to recognize if something is overpriced, and they may not be willing to take the time showing it, knowing that there are other homes that are priced correctly.
Overpricing a home can actually HELP SELL another home! Just the other day I was helping a buyer with a townhome. We saw two with very similar floor plans, and, based on recent history, the price should be around $172,000. One of the homes was listed at $189,000! Yes, it had some nice upgrades, but certainly not $17,000 worth. Any buyer would feel like they were getting a “deal” on the $172,000 – even though that was probably the true market value. And any GOOD buyer’s agent should advise their client that the $172,000 would make more sense.
As a follow-up, you’ll hear listing agents say that they like it when other homes sell, because that leaves less competition for their listing. What??? Shouldn’t a good listing agent WANT to get their client’s home sold sooner rather than later? After all, isn’t that what the SELLER wants? Besides, if a lower-priced house sells while an over-priced house is still on the market, that will affect the value of the over-priced house when it comes time for the appraisal! (I’ll talk more about the appraisal in another blog)
An over-priced house also sits on the market longer. The term we use is that the listing becomes “stale”. A house is shown more when it first comes on the market, and showings dwindle after the first couple of weeks. Lowering the price can increase the number of showings, but the number of showings will not be greater than when the house originally comes on the market. Why waste the opportunity for a potential buyer to see the house with an unreasonable list price?
When I first got in the business, my Manager always said “Homes that are PRICED RIGHT and SHOW WELL are the ones that sell”. How true…