If you’ve ever sold a home, you know the worst part – the waiting game. You sign the papers, your Agent lists the home, and you….wait. Wait for showings, wait for offers, wait for responses. It’s annoying and stressful. It leaves you wondering – what’s the holdup? My house is awesome!
99% of the time, the answer is The Price.
Agents and Sellers agree that the most stressful part of the entire process is setting a price for your home. Clients fire Agents (and Agents have “fired” clients) over the price more often that you think. Putting a dollar amount on something so close to the heart is very difficult, but it’s very important. Starting at a reasonable price is important because of:
- Timing – Agents who are looking for homes for Buyers check the new listings every day, often with an automatic search that hits their Inbox every morning. Once your home hits the Listing Service, agents are going to see it right away. Generally, most activity on a listing is in the first two weeks – after that it slows down to an occasional showing and even more occasional offer. As tie goes on, Agents have seen your house a million times on the Listing Service, and any excitement for their clients has faded away. Subsequent offers come in much lower because Buyers think you’re desperate to sell after being listed for so long.
- Negotiation – A lot of Sellers think that they should price much higher than the market price so they have room to negotiate. You should have some padding in your price, but too much room is trouble. What happens is that a Buyer knows it’s overpriced, so their offer comes in much lower than it would if it had been priced well. It’s a psychological game – the Buyer thinks the Seller is trying to trick them, so they respond with a trick of their own, and everyone is unhappy with the offer.
- Price Drops – Another Seller tactic is to start high, with the idea that they can drop the price later, hoping to capture a Buyer who’s not familiar with the market. The problem is that any smart Buyer with a good agent will know the market prices, and it’s almost impossible to get an offer at that price. And then, you have to drop your price. This looks terrible to Buyers – the assumption is that something is wrong with the property physically. The property may be perfect inside, but a price drop is a signal of trouble to a Buyer.
So, how to avoid a bad price?
There are two big pitfalls to avoid when pricing your home – one is taken care of by a good agent, and one you can do yourself.
- Look at the Comps – “Comps” are comparable properties, and your agent can get data for sales in the area of your home. The first thing your agent should do on a listing appointment is talk to you about comps. They are readily available to your agent, and can be run on a crazy level of detail. Sometimes, comps are hard to come by for some homes – they may be truly unique or in an area where not a lot of homes are sold – but in general, numerous comps can be had for your house. A good agent will spend the time before your appointment reviewing all of the comps available, and narrowing them down to the most accurate for your home. If your agent does not have good comps for you, get rid of them and find another agent right away. Understanding comps is a basic part of being an real estate agent, and if they don’t understand them or are unwilling to put in the work, they’re not a good agent.
- Check your Emotions – This is the hardest part of selling your home – all the paperwork and house cleaning and appointments are nothing compared to separating the emotional attachment to your home from the reality of the market. Not only is this the place you’ve lived your life and had fun and been comforted, it’s a part of your identity. This skews a Seller’s opinion of the home, and understandably so. In addition, after having been with them for so long, little problems with the home become invisible to you – you don’t even notice the crooked light post the former owner installed (and you never quite got around to fixing) but a Buyer will. Emotion attachment to your home can be hard to conquer, so make sure you discuss the price with your agent, and keep an open mind and eye to the reality of the market and your home.
Ultimately, you set the price of your home, but make sure you look at your options. A well-priced home sells quickly, and a good agent can give you the market information you need to make a good choice. No one wins when a home is sitting on the market forever, and it’s a huge source of stress on a family. You may think that you can outsmart the market, but you really can’t. Avoid overpricing your home – it’s worth it in the end.
Looking to sell a home? Call or text me at 219-765-2062, or email me at email@example.com, and we’ll set up a no-pressure consultation on the value of your home!