Can we list high and come down on the price later?
Timing is extremely important in the real estate market. A property attracts the most interest from the real estate community and from “Educated” buyers during the first three weeks it is listed. If you price it high even for a couple of weeks, you will be missing most of this market.
What is the greatest danger of overpricing?
The house sits and doesn’t sell. Then it starts to be considered shopworn, you get only lowball offers and you end up taking a lower price than you might have if you priced it correctly to begin with.
If my house sells in the first month, doesn’t this mean we underpriced it?
No, this shows it was priced perfectly. If it were underpriced, you would have multiple offers in the first several weeks, possibly leading to an above market sale.
If I list my home at or below the market, won’t buyers think there is something wrong with it?
No, quite the contrary. Other Realtors will know it is priced realistically and they will tell their clients. Experienced buyers will also know it is well priced. Their questions will not be what is wrong, but what do I need to offer to be sure I get it before multiple offers come in and it goes to sealed bids.
How long should it take to sell my house?
The average number of months that a house remains on the market is about the same every year for overpriced homes. The chart below compares the average number of months a property was on the market against the percent the original asking price was above the eventual sales price. This chart shows that no matter how hot the market, if you price a property significantly above its market value, it will take a long time to sell, and often at a price substantially below what it would have sold for if priced accurately.
What do the number of showings and offers received tell me about my price?
If, during the first month, you are getting drive-bys but people are not actually showing the house, it means that the Realtors think the price is unrealistically high and are showing Buyers other properties where they can get more for their money. You are approximately 12+% above the market. If, after the first few weeks, you are getting only a few showings, it means Buyers are finding nicer homes for the money. You are approximately 6-12% above the market. If you are getting a reasonable number of showings, but no offers, it means you are close but still not in the running. You are approximately 4-6% above the market. If you are getting second showings but buyers are buying something else or giving you only very low offers, you are still 2-4% above the market. Ask your Realtor how many houses in your price range have sold. If your house is priced correctly, according to the National Association of Realtors, you should be receiving an offer for about every 10 showings. After the initial 4 weeks on the market, a correctly priced house in a normal market should be receiving 1-2 showings a week. During the initial excitement period, you should be receiving 8-12 showings a week.
Does it really matter to the Realtor if my house sells for the right price? After all, their commission is not dramatically affected if my house sells for less than it is worth.
It is true that the commission change is not great, but this misses the point. A Realtor’s business comes from happy customers and their referrals. No one can stay in business if they do not have Clients who feel that they always had their best interests at heart and worked hard to get them the best price possible.
Shouldn’t I leave room for bargaining?
Yes, some buyers always insist on trying to get a house below the listing price. They take great pride in appearing to get a bargain. However, this is not the buyer you really want. After bargaining down the price, they will usually continue to try to get more reductions based on their inspection reports. The buyers you want have seen enough homes in the market to know value when they see it. They will be happy to pay asking or even above. Their agent, also knows value, and will counsel them to make a good offer.
If I still want to price my house above what the Realtor suggests, will they really try to market it?
If we agree to accept a listing at a price higher than the CMA suggests, we are also agreeing to market it aggressively. We will not compromise our reputation for superior marketing and client service. It is likely that real estate salespeople suggesting an inflated price may also be the ones who can not be trusted to market it. They may be in the business of “buying listings” by suggesting an unrealistic price. They like the prestige of having a lot of listings and they count on the homeowner eventually reducing the price to a level it will sell. They do the minimum and wait for the house price to come down.
What does a Realtor do to earn their commission?
Realtors specialize in bringing buyers and sellers together. Since we are involved in so many transactions and are educated specifically about them, we know what red flags to look out for and how to avoid them. Realtors work hard to work with qualified buyers so that when your house is shown by a Realtor it has the greatest chance of being sold. There are specific deadlines and schedules that have to be met in a transaction. Title and escrow documents to the lender, appraisals, home inspections, repairs and many other details all need to be followed up on and scheduled in a timely manner to ensure a successful transaction. It is the Realtors job to orchestrate this plan.
