Home Seller Mistake No. 1: Pricing Too High
“I can always lower the price later if I don't get any offers.”
That statement costs some home sellers time and money. Think about it: unless you own your home free and clear, you have a mortgage. This means that it costs you money to stay in the home. You would love to get that money back out at the end of the sale but if you end up having to move before your home sells then the double payments are hard to recover from. You also may miss the high point of the season when the most buyer are shopping for homes due to a high price in Spring that has to be lowered in Summer when there are less buyers. Worst of all you might get a reputation of being hard to sell just by being on the market too long and end up having to sit on the house through the Winter when there is only a 25% chance of selling (in Columbia).
Yes, you can always lower your asking price, but that’s not always a good strategy. Time and time again, experience shows that sellers who list competitively from the start get a better price than sellers who list high and then go lower and lower. One of the other reasons lowering is not the best idea: What do you think when you see a "Price Reduction" , "Price Improved" sign?
“Wow, three price cuts in the last four months… There must be something wrong with that house.”
“With all the price cuts on this house, the sellers must be desperate. Let's offer them far below what they’re asking and see if they bite.”
Many buyers think there is something wrong with the house or that it is having trouble selling. If a price reduction is done it should be done 'in the dark of the night' with no sign, no mention.
Sound Pricing Strategies
A far smarter approach is to find a knowledgeable agent, like Susan Horak, who understands the local market and then work together on setting the right price. A good agent can help you avoid the overpricing trap. Experienced agents like Susan Horak understand how to accurately price your home and make it stand out in the market. Susan is a master at CMAs (Comparative/Competitive Market Analysis). When she sits down at your kitchen table she brings with her all the numbers you need, so that she isn't just pricing your home, she is teaching you how to price it for today's market. Together you will find the right price and you will know the strategy behind that price.
An experienced agent will help set the right price for your home by considering the following:
Similar homes, via a Comparative Market Analysis (CMA): Your agent will provide a professional analysis that goes deep into stats about recent sales and current listings similar to your home in size, age, condition and features. Sales within the past six months are especially relevant as these will be used by the assessor to justify the price to the bank.
A good agent looks at the activity on the street in the past year or so first. Most neighborhood were not all built at the same time but rather in phases with homes built as far as two decades part at times. If your street is newer than the streets on the other side of the subdivision it is likely to comp a bit higher in price.
Next they look at homes like your in the whole subdivision. If you have a 3 bedroom 2 bath slab home there really isn't much point in caring what the 4 bedroom 3 bath walk out ranch two streets over sold for.
Radiating out they then will look for a years history of what homes like yours have sold for in that area of town. If a home in Thornbrook sold for X and your home is in Vanderveen you don't need to consider that sale, your on the other side of town and will attract different buyers. Stick to the side or quadrant your home is in. Buyers often don't look all over town, they look close to work, close to family, close to their favorite shops and restaurants.
From these comps and a few others based on your specific home you should start to reach a price range. Next you need to look at the market strength and saturation levels to know how aggressively you need to price your home.
General market conditions: Is it a seller's market or a buyer's market in your community? It's important to note that what's happening nationally may not reflect local conditions. Your agent can explain the difference and clear up any misconceptions you may have.
A good agent will show you how many actives (home currently for sale), pendings (homes that are under contract to sell but have not closed) and closeds (homes that have sold in that past year) there are for one year back. With these numbers you can find the ratio for how many homes that market can absorb in a year. For example:
Active 5
Pending 3
Sold 7
Add the Pending and the Sold numbers as these are the homes that have been presented to the market that a buyer can not have. This gets you a ratio of 5/10. This means that there is currently a 6 month supply of homes on the market.
It is also important to look at all the active competition for your price range. With this search we are 'thinking like the buyer'. What might a person that ends up looking at this home have told their agent to look for?
From here look at how you home compares in condition, size, location and age to the other actives. Basically you are ranking the homes best to worst and seeing where your home falls, it is likely priced lower than nicer homes and better than worse homes. Simple.
You should now know what your home should be priced at but more importantly you will know WHY. If you would like Susan to come to your home and walk you through the pricing process just give us a call at 573-876-2849 or shoot us an email at Susan@SusanHorak.com.
