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Pitfalls of Overpricing your Home

Thursday, October 20, 2016   /   by Glenn Musto

Pitfalls of Overpricing your Home

Pitfalls of Overpricing your Home

Glenn Musto|Thursday, October 20, 2016. When preparing to sell your home, a significant amount of thought and planning should go into determining the asking price. Beach_Sunset.jpegThe most common mistake that sellers make is to overprice their homes. So – how should you go about determining the best price?


You could personally search through homes available online, in local newspapers, Real Estate magazines, or on the MLS (Multiple Listing Service) to discover prices for similar homes. A professional Relator will also look at recent sales. Why? An experienced Relator understands that active listings are active for one reason: These homes haven’t sold. While it’s important to be aware of your competition’s pricing, searching on your own through the MLS or other sources for current listings may accomplish nothing more than to tell you what your home won’t sell for.


Evaluate the price “range” that your home fits into. Think like a buyer at this point. If you were a buyer in search of a similar home, what homes would you want to see in what price range? If you planned to spend $750,000 for a home, would you only look at homes priced exactly at $750,000? Probably not. More likely, you’d at least consider homes priced from around $699,000 to $800,000 or so.


Be realistic. Some sellers become afflicted with pie-in-the-sky thinking, especially in the early stages of their plan. They imagine some uninformed buyer simply falling in love with their home’s location, or décor, or amenities, or other, and grossly overpaying to obtain it. After a few weeks or months on the market, they realize that buyers are well aware of what’s available and at what prices. So remember – everybody wants a good deal. And buyers are not stupid. They shop around just as you will, once your home is sold. So, price your home to be competitive in the current marketplace. Set a price that represents a fair value both for you and for the purchaser.


Of course you’d like to obtain as much as possible for your home. You don’t want to “give it away.” Right? So why not overprice it just a bit, to leave some “wiggle room” for negotiating? This line of reasoning contains several pitfalls.


Pitfalls that result from overpricing can include the following:
A) If other homes are for sale in your area, overpricing your home makes these others look like bargains. So, overpricing can help sell competitive homes before your own.


B) Savvy buyers who have done their market research rarely waste their time looking at overpriced homes. And even the few who do may consider your pricing an insult to their intelligence. Do you really want to risk losing credibility with such prospective buyers?


C) Many buyers are not comfortable with negotiating. As an example, large numbers of people truly dislike trading cars because they dread the hassle involved. Going into the situation, they expect to be presented with an overpriced product by a pushy salesperson trying to take advantage of their ignorance. This can be quite intimidating. This also explains why most prospective home buyers work with a professional Realtor whom they trust. They need professional guidance, reliable information, and they want someone with experience in their marketplace to handle negotiations for them.


D) Sadly, some real estate agents will initially agree with the unrealistic price that you quote. They do this so that you will give them an exclusive listing on your home. After a few weeks, you can expect such a realtor to tell you how the market has changed unexpectedly, and this is why they have not been able to produce a buyer for your property.


E) Should this happen to you, you will have offended some prospective buyers and missed others who might have seriously considered or even bought your home at a fair price.


F) The best time to sell your home is during the first two weeks after it appears on MLS. Any home that sits on the market for more than 30 days begins to feel stale to active Realtors.


G) When you lower your price after your home has sat unsold on the market for a while, this may give the appearance that something is wrong with the home. The result is that you may wind up accepting less than you would have, had you priced it fairly to begin with.


H) Serious buyers may not even be aware that your home is available. If a prospective buyer or buyer’s agent is searching online listings for homes priced between $700,000 and $750,000, and your home (fair market value $750,000) is priced at $800,000 or $825,000, your home will very likely not make the list for them to view.


I) Most home buyers require a mortgage today in order to purchase a home. Should a prospective buyer fall in love with your home and present an acceptable offer, an overpriced home will almost certainly not appraise with the lender. That is, when comparable home sales in recent months won’t support your sales price, then your buyer won’t be able to get a mortgage


J) What about a cash buyer who simply “must have” your home? With few exceptions, any buyer with the available cash to purchase a home in higher price ranges is likely to be quite savvy when it comes to fair values. Otherwise, how do you imagine they accumulated this amount of cash?


Bottom line: The wise course is to price your home fairly, so that it will appeal to the majority of prospective home purchasers. The most reliable way to arrive at a price that reflects fair market value is to consult a professional Realtor who is familiar with your marketplace.


In our Pinellas County area of Florida, we’re fortunate to have homes of all types available, in many different areas and price ranges. Buyer demand is currently quite strong in Clearwater Beach, Sand Key, Belleair and Belleair Shore, Indian Rocks Beach, Indian Shores, North Redington Beach, Redington Beach, Madeira Beach, Treasure Island, St Pete Beach, Pass-a-Grille, Tierra Verde, and St Petersburg, FL. While more condominium units are generally available, we still have an enviable selection of single-family homes in our beach areas.


If you are thinking of selling your home in any of these areas within the next three to six months – single family or condominium – you’d be wise to find out its true market value today to help with your decisions.

For a free online report today from a professional Realtor in your area, click:
Free Online Home Evaluation.

Team Musto has qualified buyers waiting right now to purchase your home – single family home or condominium.

When you call, be sure to ask about our special Florida homeowner’s guarantee:
Home Sold Guaranteed – Or we’ll pay you $10,000

Call Team Musto now at (813) 610-4684, and start packing!