Danger! Don't Overprice Your Home! (if you want to get it sold)
When listing a home, overpricing is the single biggest mistake a seller can make.
After 20 years of listing Portland homes in every market imaginable, I want to set the record straight on why it's a HUGE MISTAKE to list your home higher than market value.
Consider this: There are only 2 reasons a home DOES NOT sell in today’s market.
Why do sellers overprice their homes? Because it is a common practice among real estate agents to give the seller an overly optimistic price in order to get the listing. We in the industry call this, 'buying a listing' and it's a very common practice, unfortunately.
I see this everyday when I meet with sellers who are told their home is worth more than it really is. I'm really very good at knowing market price. After all, I've worked right here for over 20 years and grew up in Portland. It's second nature for me to know the market value of homes. Chances are I listed a home similar to yours in your very neighborhood!
It's very frustrating to have sellers I speak with get such bad information.
Doesn't it make more sense to price your home correctly and catch any pent up demand in the market on the very first day you list? Consider this: on any given day, buyers are in the market looking for a home. Some of these buyers may have been looking for months, some for days. This is called, 'pent up demand'.
When a new home comes on the market, these days most buyers get an email notice either from the agent or from an automated home search like the ones we prepare for our buyer clients.(or you can simply sign up here). ON THAT DAY, and not even the next, you will have the highest number of buyers exposed to your home. After that first day, only new buyers coming into the marketplace will see your listing when they find it doing a search.
Again, doesn't it make the most sense to price your home to catch this pent up demand, instead of pricing it too high and missing them all? Did you know that the longer a house sits on the market, the lower a final price it will get? And, it's a fact that the homes that sell within the first 30 days, have the best chance of selling closest to their list price! How many times have I had to explain this to sellers who tell me that they are:"not be in a hurry. We'll just wait until we get our price!"
For this reason, I never, ever overprice my listings just so I can get listing business. I just can't put sellers through the agony of watching the days slip away with no offer and then they are chasing the market as it goes down. It's not good business and it's totally unfair to sellers.
I hope that now you can see that if a home is priced correctly and exposed correctly when it is new to the market, it will receive an offer in a timely manner and will be sold while the seller has the leverage of being a NEW listing, when buyers are excited about the home and fear perhaps another buyer will snatch it up.
To further explain this problem, here is exactly what will happen to your home if you overprice:
- home comes on the market priced too high,
- potential buyers pass on it,
- a month passes and the seller reduces the price and
- still no offers or showings.
- Another 30 days pass, the seller reduces yet again.
- The home is no longer a HOT new product on the market.
- Buyers have already seen the home come up on their search criteria twice and have passed on it.
- Now when it shows up again, they may not even pay attention. They passed on it before, but they may not remember why.
- It seems the home has become invisible.
- Now the home may be priced in the ball park,
- few buyers are paying attention.
- The home is getting old and tired,
- 90 days on the market, no longer a hot new listing, PLUS the market has declined in that time.
- Reduced the price further to sell.
- Finally when the offer comes the buyer has the leverage. The home is market worn. The buyer has little fear someone else will snatch it up, because no one has wanted it all this time.
Sellers, please select your agent based on their ability to expose your home to buyers that will value what your home has to offer. Be smart and select a broker with the courage to tell you the truth about your home's value. You need a broker with the strength to be honest with you and to also have the knowledge and experience to negotiate on your behalf to get you the absolute top price for your home without spending months to get it.