Listing Tip #1 Price it right and make more money (Part 2)
Should You Start Out with a HIGH Listing Price?
It’s important to challenge a long-standing “myth” of real estate. “The initial listing price isn’t that important because the price can always be adjusted down later.”
Many homeowners believe this. It is a myth. It’s not true and it is financially destructive.
If most buyers first viewed your house because of a newspaper ad, a magazine, the internet, brochures, an open house, or the sign in your front yard, the initial listing price probably would not make a difference. The house would always be “new” to those seeing it. But most buyers do not come to your house because of various types of advertising. That is the another myth. Sure, some buyers call on an ad, they may look at that house, but not always.
The vast majority of the time, serious Buyers already have a Realtor they are working with. Once they talk to an agent, a crucial part of that agent’s job is to give them any info that may be relevant to their decisions making process. A real estate purchase is the opposite of an impulse buy so people are scrutinizing every aspect of each property with the guidance of a Realtor. Their Realtor knows the current inventory and how to navigate the MLS on a deep level, how to pick through it to find the best deals for their client and will know of other properties that do fit their needs. Those are the properties that buyers look at, and this is how most buyers, especially the serious ones, end up looking at your house as well. Buyers end up looking at your property because of other agents, not because of an ad. Hardly anyone buys the house in the ad.
So, we need to get other agents interested in your property, and this is where my role as listing agent comes in. The listing agent gets Buyer’s agents looking at your home. Those agents have clients who called in on other properties. Buyer’s agents are not swayed by advertising. They look at the needs of the client, where the client wants to live, location, condition, and other details of the property… And most importantly…. price.
If your house is overpriced, agents are going to show similar homes that are priced more attractively. Your listing will get passed over. Again and again. It won’t be long before the days on market count goes up and Buyer will assume there is something wrong with it when really it’s just price. Every Buyer has the same worst fear: Buying a property that was not the best possible deal for them. They will not buy something without looking around first. You’ve probably heard a story somewhere about some rich foreign Buyer who just bought something in our area without looking at it and paid full price. I’ve also heard of people in my area who have won millions of dollars in the lottery but I haven’t met any of those yet either. Amazing sotries get told and retold because they are amazing. Common stories don’t get told much because they’re common. Expect people to look hard before deciding.
Agents pay the most attention to homes newly on the market. There are fewer new listings than current listings. It is easier to keep an eye out for what is new, compared to the vast number of current listings. New listings are on the hotsheet circulated in real estate offices. The MLS identifies new listings. With Realtors looking at newly listed homes so aggressively, a properly priced home gets attention..An overpriced home gets passed over.
You may be thinking, “But I’m willing to negotiate!” Buyers aren’t thinking in advance about how much you are willing to negotiate. They are comparing your asking price to other asking prices. Plus, when your house is new on the market, you may not be willing to negotiate as much as you will later, once you’ve realized your error. Keep in mind that statistics show, quite often, the first offer is the best offer. The big fish usually bite first.
So what happens if you overprice in the beginning and get more realistic later? You don’t have all those important Buyer’s Agents looking at your listing because it is new. A price reduction later in the listing cycle often gets overlooked. It is just one of many listings, not one of a few new listings. As time passes, you could actually become desperate to sell because you’ve accepted a new job or because you have already bought a new home. That is a recipe for receiving lowball offers, so you are likely to end up selling for less than if you had priced the home correctly in the first place.
Realtors know this stuff, but many sellers still mistakenly believe they should “price it high” because they can lower the price later, if necessary.
That is not the best strategy. I have better ones that will make you more money with less time and stress invested. My profession is to guide you in this way and allowing me to give you the best service I can helps us all.