Seven Reasons That An Overpriced Home Can and Will Backfire In a Buyers’ Market

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It is fair to say that everyone listing a home on the market would like the home to sell. If not, why would they put it up for sale in the first place? But if you think about it, sellers that are not savvy and choose to ignore selling basics will end up suffering the consequences. To help you avoid becoming one of those people that commit serious pricing mistakes, we have explained seven ways overpricing would negatively impact your chances of a successful sale.

An Appraisal That Doesn’t Line Up

As a requirement of virtually all lenders, an appraisal is part of the loan approval process. And since almost all buyers obtain some form of financing the likelihood of finding an interested buyer that remains engaged in the transaction where the appraisal value doesn’t match the selling price is slim. In short – the selling price must line up with the appraised value and the market will determine the appraised value at the time.

Uninterested Buyers

No one will line up at your door when it comes to open house time. Today’s savvy buyers simply will not want to waste time on properties that seem way out of their league, appear to be listed with no room for negotiation or may end up taking more time overall.

The Property Is Flagged As a “Bad Choice”

People shopping for properties spend a lot of time searching many listings and eventually in the process, they end up with a system that quickly eliminates the bad picks and holds on to the potential ones for review later. A home that has been overpriced immediately raises a red flag and the potential buyer drops it off the list, labeling it as a “bad pick”.

Competition Gets the Upper Hand

When there are several similar properties for sale in the same vicinity, chances are buyers will look at most or all of them. If one or two of them are clearly priced more than others with the same square footage, amenities, neighborhood and other features, buyers will simply move away from your listing and go to other homes in the neighborhood.

The Home Becomes “Stale”

After a while, the same buyers looking for the same type of home will end up seeing the same homes that stay on the market and don’t sell. Since overpriced homes don’t sell too well, neither do they attract much attention and they end up looking like a lifeless vacant home. In fact, buyers begin wondering what is wrong with the property since it hasn’t sold, causing even fewer buyers to express an interest.

Wider Gap to Fill During Negotiations

Once there is an offer on the home there will be negotiations to contend with. Buyers being very knowledgeable and resourceful these days will have a fairly good idea of what your home is really worth. Together with their agent, they will leverage many factors during negotiation, including the appraisal value, other properties in the area and the current slow rate of appreciation in the housing market. With a wider gap to fill during negotiations (buyers starting out at market value and sellers’ starting point much higher) it will be difficult if not impossible to come to reasonable middle ground.

Missed Opportunities for the Perfect Buyer

So often the perfect buyer, at the right time, is ready to make an offer on the home that has everything they want in it. But if that buyer never gets to see your home, they will never know that it is the perfect one for them. By listing your home way over the market value, you stand to risk losing the opportunity to meet the one buyer that is ready to buy your home.
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All of these can easily be avoided – simply by meeting with your Realtor to have a detailed consultation and determine the best price for your home, in its condition, within its location and relative to other properties in the area. Since many factors determine how much you can reasonably list your home for, it is vital that you meet with a professional that can make an accurate price determination for you. Remember, the more effectively your home is priced will result in a more positive and financially fruitful experience.

Five Tips to Selling Your Home in 2012

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It's 2012, and the new year is starting off great.  We added seven new listings this week, so we are focused on getting those homes sold for our sellers.  That reminded me to create this video and write this post to give you some real-world tips on getting your home sold this year.

Number one, make sure that you list early in the year.  There is no question that the competition will increase as you get closer to spring and summer.  Not only that, foreclosures and short sales will also go up during that time as banks begin to list them on the market.

For some reason, home sellers think that spring and summer is the best time to list their properties on the market.  In reality, there is more competition during that time.  Buyers have much more to choose from, and your house can get lost in the shuffle.  Instead, list early so that you are targeting the realistic segment of the buyers market.  People who are out shopping for a home during the winter months need to move.  They are much more motivated to find a property and are willing to negotiate with you.

Next, make sure that you or your agent market your home aggressively.  Simply sticking a sign in the yard and running it in the newspaper is not enough to get homes sold these days.  Remember that the squeaky wheel gets the oil, so you have to be the squeaky wheel in the real estate marketplace.  Innovative marketing strategies are the only way to get a home sold quickly and for top dollar in 2012.

Third, make sure that you and your agent review your showing activity on a regular basis.  If you have no showings, that should tell you something.  That means that something in your marketing plan needs to be adjusted.  The same can be said for getting a lot of showings and no offers.  You have to adjust your marketing program and plan of action on a regular basis.

Fourth, don't get offended.  Some buyers are going to place lowball offers.  Some people think that they must do that in order to negotiate a real estate deal.  Remember that you can always counter offer.  Any offers equal activity.  Activity will eventually lead to a sold home.

Finally, think of selling your home as a financial decision and not an emotional one.  So many home sellers make the mistake of getting emotionally involved in the transaction.  They get offended over offers, buyer feedback and a multitude of other parts of the transaction process.  You have to think of selling your home as a financial decision and nothing more.  Remember, you want to sell the home to someone else so you have to let go of the emotions associated with it as much as possible.

As always, let us know how we can help you with any real estate question or transaction.  We welcome your referrals and look forward to speaking with you soon.