by Cara Ameer
When it comes down to it, the most important advice a real estate agent can give a seller is how to price their home. No matter how beautiful or well-maintained it may be, the amount of upgrades it has or how well it shows, if a home is not properly priced, it is likely going to be a tough sell.
The battle most often lies not with what the market really thinks of the home, but how the seller perceives it.
This alternative reality can be difficult to break through when working with a seller to set a list price or on a price adjustment to match the true sentiments of the market.
Here are seven pricing myths sellers often believe.
1. It is better to price the home on the high side because the seller can always come down. If buyers are interested, they can make an offer.
Well, not quite. If a home is overpriced, a seller risks losing potential buyers that may not be stretching their search into a price range they are not comfortable with.
The asking price sets the stage and may invite or dissuade buyers based on the dollar amount. Just as you would painstakingly prepare your home for sale, you never get a second chance to make a first impression price-wise.
2. If a home is priced just right, a seller risks leaving money on the table.
Actually, the opposite is true. A home that is well-priced tends to generate a lot of interest and can result in multiple offers.
A shorter marketing time brings strong offers that could result in a home selling for over asking price.
Buyers are less likely to play “lets make a deal” and nit-pick every little thing as they know there are many people competing for the same property.
3. The price gets better with time. If it doesn’t sell this time, the seller will magically get a better price by re-listing next spring, next summer, etc.
It has been said before, but it needs to be said again: A home that sits is not like fine wine — it does not get better over time.
The longer a home stays on the market leads buyers to question why it is still sitting, and they tend to avoid it like the plague.
Subsequently, any offers that are received tend to be perceived as too low by an already frustrated seller, who thinks there weren’t any buyers for their home while it was on the market the first time.
Granted, some seasons can be better than others and that really depends on where a home is geographically located.
Trying to get maximum traffic in the dead of winter may not be the best strategy, but if priced aggressively, a seller may just get that serious buyer who is ready to get the deal done.
Waiting to re-list again may result in having to compete with more inventory that could be nicer and offer more bang for the buck.
In fact, the additional carrying costs of a mortgage, maintenance and upkeep, as well as the potential to have to make repairs such as dealing with an aging roof or replacing an air conditioning system, eat into the profitability of commanding a better price next year.
If the home is somewhat dated on the inside?
Price out the cost of replacing granite counters, updating appliances, repainting and other updates, and it will likely be much less expensive to adjust the price without as much hassle.
4. X amount is as low as the seller will go.
When faced with an actual offer that is less than what they want, sellers love to draw a line in the sand and dig their heels in over an arbitrary number that they deem to be “their bottom line.”
Who decides what a property is ultimately worth anyway? The reality of real estate is that the buyer sees the glass as half empty versus half full and, in some markets, they are holding the cards.
The seller can decline their number, but they may never get there with another buyer and a subsequent offer may be lower or layered with conditions and complications.
In essence, a seller will end up buying their house back for the difference between what they would not work with.
5. An offer should come in close to asking price.
Sellers are often disappointed at the initial price when an offer is received and ask, “Why so low?”
Does a seller really think a buyer is going to be generous with their initial offer?
Unless it is a really hot property, priced aggressively or in a low-inventory market, no buyer is going to willingly offer more than they have to, especially on a first pass. They want to get a sense of the seller’s flexibility, or lack thereof, before deciding their next move.
6. The fact that a seller has a dated home with older items in need of replacement shouldn’t impact its selling price.
So, the home has “upgrades” circa 1990 with white melamine cabinets, beveled edge laminate counters and builder grade 12-by-12-inch tile throughout with brass fixtures everywhere, and the seller expects the buyer to pay full asking price or close to it?
Reality check!
The buyers are looking at how much they are going to have to spend to bring the home up to today’s standards and are going to deduct accordingly when formulating an offer.
7. The buyer’s offer is simply too far off the asking price to counter.
Okay, so a bird in the hand is worth two in the bush. A buyer has stepped up and put pen to the paper with a proposal. An offer is an invitation to negotiate and begin discussions about the seller’s property.
It can be easy to get offended, but it is best to keep emotion out of the negotiations as much as possible and work in good faith with what was presented. A seller will learn very quickly if it looks like something can be put together.
Pricing a property is a delicate dance that can often be a harsh reality check for sellers as to what the market thinks about their home.
The bottom line is that the market will not typically pay as strong a price as a seller wants or expects unless the home is a highly sought after, rarely available type of property.
Setting the stage with the right pricing will often set the tone for how the listing experience will go.
— Inman News.