Listing Tip #1 Price it right and make more money (Part 1)
We live in a time where you can look up nearly anything on the web, but proper interpretation and application of that information requires an experienced eye, so I’m not real concerned about trying to keep these general tips to myself. Working with clients who are better informed is easier on all involved. Unfortunately, there is a lot of misinformation out there mostly due to a blend of poor reporting practices in the media and those who are looking to cash in on people’s ignorance in various ways. This sort of thing is the inspiration for this blog, and in turn this series of posts about listing tips. If you live near Nanaimo, then of course I hope you will use me, if you don’t live here then I hope you can use the info here to help you choose your Realtor and your action plan wisely. At least you can start with some solid info and build upon it.
Putting your existing home on the market is no minor task. The key to making it successful, like in so many areas of life, is proper planning and realistic assessment of the situation. Whatever the current market is like and whatever your property is like, there are some fundamental concepts that you as a Seller need to know to get top dollar for your property. I will outline such concepts in this listing tips series but please understand that there are also the ‘case by case’ aspects that pertain to your situation, your property and current market conditions as well. Those dynamics are too specific and ever evolving for a blog post and you would need my services in person as those aspects are often unique and sophisticated. You and I both want you to get as much money as possible and keep you safe while doing so.
Ok, so on to the tip:
My first listing tip, is the most important of all. I see people making this mistake all the time and it’s something that is although understandable, is disappointing to see every time. That mistake is, overpricing your home.
I’ve really had a lot of thoughts on this topic over the years so I’ll put some of those longer thoughts below the point form version as a type of “further reading” but here are some of the effects you can have with pricing in point form:
Dangers of overpricing:
- It will take longer to sell
- You will have fewer showings
- You will receive lower offers
- Your property will help sell other properties
- The higher the price above realistic market value, the fewer buyers willing to consider your property.
Benefits of proper pricing:
- Faster sale
- Less Inconvenience with keeping the home picture perfect all the time.
- Exposure to more prospective buyers who can afford the home.
- Increased salesperson response because Realtors who see your home will be much more likely to show it to their clients if they think they may be interested in buying it. Us Realtors don’t get paid for the houses we show, just the houses we sell. Buyers don’t want to buy overpriced homes so their Realtors will steer them towards the best priced ones as much as possible.
- Attracts higher offers as Buyers are less likely to offer low out of fear of losing a good home.
- Potential for multiple offers which likely mean a higher price than you could get by asking a higher price. Feeding frenzies are amazing to see.
- Less stress
A comment I hear from friends or clients at least once a week is “That property has been on the market for a while but it hasn’t sold.I wonder why.” I don’t even blink and say “I’m pretty sure it’s overpriced. 95% of the time it’s the price.” Something like 98% is probably more accurate but I have a philosophy of erring on the side of caution.
Everyone wants to get the best price they can for their home. Who wouldn’t? But many people have a way of letting their desires control their mind despite their attempts to remain rational and emotionally detached. The result is that people often convince themselves that their home is worth more than it really is. Some Sellers get upset with me when I tell them my honest and well researched assessment of what their home is worth. Buyers have a tendency to think the properties out there cost too much and Sellers have a tendency to think that their home is the most valuable of its kind. The important difference in their situations is that Buyers have a fair bit of time to come to terms with reality (days, weeks maybe months) before they need to make a decision on their course of action. They get to explore lots of listings online and others in person and ultimately choose the best deal that is out there for them. Sellers on the other hand, have to decide a course of action on pricing, among other things, early in the process. If they are stubborn about their assessment of reality (as in, they price too high) the real estate market will by its very nature devalue the property.
Yes, we can change the price in a couple of weeks if there are no offers. But by then, it is no longer in the limelight. The sense of urgency that makes buyers want to grab it before someone else does (which makes them give higher offers) is gone. Now they will want to negotiate with you more aggressively because they are less afraid that another Buyer will snatch it out from under them. A Seller’s market is more forgiving for these things but it’s likely that you could have gotten multiple offers that drive the value above asking price. In a Buyer’s market it’s not forgiving at all. that’s the really scary one because not only are you devaluing your home by having it on market longer, but the actual value of that type of home is going down over time as well. That is a model for financial self destruction and most foreclosures start off this way. Whichever market it is, you are leaving money on the table by overpricing.
The main take away of all of this is a cold statement that I hope is sobering: The value of your home is not affected by what you think it’s worth. It’s not affected in any meaningful way by what your Realtor, the Appraiser, the tax assessment or the bank thinks it’s worth. Nor is the value affected by how much money you need or want. The market is what sets the price and the correct price is the one that makes your property be the best available option in its price range. In other words, it’s worth what a Buyer is willing to pay for it. What you do get to decide is if whether the market has to offer makes it worthwhile for you to sell your home. The Realtor is in charge of the marketing plan and is your coach on the overall process. Your Realtor should tell you what your place is likely to sell for. Your Realtor will know what your competition is like, and trust me, there’s lots of competing properties which buyers will also be viewing in addition to yours. Even if it’s a Seller’s market. They want the most for their money, so why would they look at a a list of similar properties and then buy the most expensive of the bunch?
Perhaps this seems like I am being too strong here. I think for many people I may be, but I am also writing this for all those people I’ve seen who seem to be about to put themselves in a tough situation needlessly. The strong desire to get more money needs to be tempered with reason otherwise the result is getting less. I want to see all my clients get the best deal they can.
Often, sellers who are insisting that their home is worth more justify their high prices by pointing out all the things they like about it that the comparable properties don’t have. If this is you please remember that you bought your home because it suited your tastes, needs, and budget when you bought it. You may have altered the home in certain ways to make it suit you but just because certain aspects are appealing to you, don’t assume that everyone will feel the same way. My personal example applies here. If I ever build my dream home, I’ve already decided that I’ll have to live in it until I die because it would be so strange to most people that getting a decent price for it would be tough without totally renovating all my favourite things out of it. I have some pretty exotic ideas and tastes. 🙂
Unfortunately, some Realtors will take advantage of this kind of Seller by telling them that everything they are trying to convince themselves about the property is true. This is what Realtors call “Buying a Listing“. And worse, that same Realtor might tell the seller that they can sell it at a higher price than other Realtors. Despite what so many Realtors will tell you about themselves, there is no such thing as a super Realtor. Few people realize that it’s better for a Realtor to have a listing that doesn’t sell, than no listing at all. After all, that sign on the lawn and name in the MLS system increases their exposure and attracts business for them either way. Choose the Realtor for the Realtor, not their price.
If you can’t part with your property at the price your Realtor suggests, you may still choose to list it anyway. It’s up to you after all and who knows, you may get lucky and my stern warning here is mainly to prevent Sellers from getting into quagmires based on unrealistic expectations. If you are say, in a position where you want to try a higher price than the market seems to be offering and there is something truly unique about it and you don’t need to sell it anytime soon this may work for you. You can pull it off market after a few months and wait for the market to change before trying again. it’s the long listing periods and relisting again and again back to back that really kills the sold price. But generally speaking, it’s just going to inconvenience you. While you’re waiting to see if your place will sell, you have to keep your place spic and span, clutter free and be ready to get out of the house for and hour or two at a time whenever someone wants to view it. If your place is overpriced, then you’re going to be living this way for a while. But like I say, your place, your choice.
More on this and related topics in the Selling real estate section of this blog.