One of the most important jobs a Realtor has is setting the best possible list price for his Seller client. To do this, the first skill is being able to accurately “Comp” the property. Although some of this is an “art form,” make no mistake there is plenty of skill involved to set an accurate “Fair Market Value” (FMV). The lazy way is to punch in the basic numbers and let an App do the work. But the best way is to put a lot of thought into and consider many factors. For example, the “neighborhood” is one factor, but simply typing in a Zip Code is not going to cut it. You want somebody who really knows the neighborhood and has the skill to draw a map into the computer.
And the next most important job is… convincing his client to follow his advice! And that is a skill as well. Over the years, many theories have made the rounds and become ingrained in the minds of many sellers, and the problems is, so of these “words of wisdom” are wrong! Or should I say, “Fake News!” So let’s separate Fact from Fiction to get to the bottom of really is the best price to list your property for.
FICTION: If I list for a higher price, I will end up selling at a higher price.
FACT: You will sell your home faster AND for the most money if the property is listed at Fair Market Value. It is statistically proven that the longer a house sits on the market the less offers it will generate, and the less it will sell for Over 70% of homes listed today are listed overpriced, and they average selling for only 87% of their original asking price and take over 120 days on average to sell… if they sell at all! (Many sellers just give up.) Homes that are priced right from the beginning, sell for over 97% of list price with an average of only 45 days on the market to sell!
FICTION: “You want to hire me because I’ll list your home at whatever price you want” says the Agent.
FACT: Beware of agents who’ll set the list price on your house at an unrealistically high price simply to get your listing. Instead of telling you what you NEED to hear, they will tell you what you WANT to hear…because they are AFRAID that if they tell you the truth up front you won’t hire them. I will do the most extensive research possible to determine a very accurate Fair Market Value, and I will tell you if you want to list your house for too high a price.
FICTION: I can list for a high price because I can just wait until the right buyer comes along who is willing to pay the price I want for my home.
FACT: There is a correlation between time on the market and the property getting top value, just not the correlation many sellers think. Overpriced listings end up selling for less because they sit on the market too long. When new buyers come into the market, they want the fresh inventory, not the stale listings that all the previous buyers have rejected. After weeks and weeks on the market the “WWWTH Syndrome” (”What’s Wrong With This House?”) kicks in, making agents and buyers more likely to submit low offers…if they’re willing to make an offer at all.
FICTION: I can list for a high price because if the listing price starts higher, even after negotiations the selling price will still be higher.
FACT: The “Price-it-high, come-down-later Strategy” is proven to cost sellers 2-5% in the end for two reasons: (1) Overpriced homes don’t attract offers at the start, and then the “WWWTH Syndrome” takes hold (see above); (2) After price reductions, buyers and agents perceive an increased motivation from sellers so they make lower offers thinking the sellers are now desperate to get an offer. And if you’ve already moved out, holding costs can be a huge hit many sellers forget to consider: Mortgage, Property Tax, Insurance, Utilities all add up during a long sales cycle.
FICTION: If a home gets an offer quickly it was probably priced too low.
FACT: The day your home goes on the market, there are already qualified buyers in the market whose criteria matches your home (some are our clients). Often these buyers have already made offers on other homes and got beat out by a competing offer, so they are motivated. When your home hits the market and is priced and marketed correctly, there are motivated buyers who will submit a strong offer quickly because they don’t want to risk losing the house to another buyer. And quite frankly, doesn’t every seller want their home to sell quickly? So when you list with us, and it sells quickly, just remember that means it was priced JUST RIGHT!
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