SMART HOME SELLERS KNOW: WHEN THE PRICE IS WRONG THE RISK IS REAL
By Barbara Laken and Annie Alexander
In the Contestants’ Row segment of The Price is Right, four lucky people are plucked from the audience and asked one by one to guess the price of an item. The contestant whose guess is closest to the actual price, without overbidding, wins the prize and progresses to the next round. As anyone who’s watched this show knows, most contestants fail to bid on anything correctly.
Pricing games are notoriously hard to win because bidders too often rely on intuition and suggestions called out by audience members, instead of any kind rational strategy. The same can be said of many home sellers, 47% of whom have trouble separating what they feel their home’s value should be, from its actual worth. According to statisticians from Zillow, these are the 47% of sellers who overprice. Their prize? Increased market time, price reductions and a lower sales price.
TIME WAITS FOR NO ONE
Statistics show that the largest number of potential buyers see your home within days of it being posted on the MLS. If your home is overpriced, you’re missing out on this a hugely valuble one-time opportunity – and probably helping to sell your more smartly priced neighbor.
Yet, according to Spencer Rascoff and Stan Humphries from Zillow, nearly half of all homeowners overprice their properties “by about by about 6.9%.” They also found, “A quarter of overpriced homes need a second price cut, and some need several more,”while languishing on the market – causing buyers to wonder what’s wrong, and encouraging them to expect an even lower price.
A FAST SALE = TOO LOW A PRICE
A common misnomer shared by many sellers is that properties that sell within a few weeks – or before they even hit the market – must have been underpriced. Otherwise why would they have sold so quickly? This mistake is often twinned with the suspicion that many real estate brokers, desirous of a quick transaction, purposely suggest asking prices at, or below market value. This theory ignores the fact that broker compensation is directly commensurate to final sales price, and unfairly devalues the market knowledge of real estate professionals who can assess the market value of your property through a less emotional lens.
Spencer Rascoff and Stan Humphries write, “There’s a big reward for those who resist the urge to overprice…in real estate, sellers who price their house at the real, fair market value tend not only to sell faster, but also to sell for 2 percent more than their house is worth…”
Selling your home is a hugely important transaction. The price you place on your property will determine, in large part, how successful that transaction will be. We urge you to carefully consider the comparative market analysis your real estate professional prepares for you, and price your home as close to market value as possible in order to get your best price. Spring Market is here – price yourself accordingly!