Home values have increased dramatically over the past 5 years.
If you’ve been thinking of selling you may be tempted to test the market and list higher than all the other sales in your neighborhood.
Don’t do it! Setting the wrong initial list price can cost you a fortune.
Overpricing Listing Cost Seller Almost $50,000
One of the biggest pricing failures I saw last year occurred near where I live. The graphic below shows what happened.
Last spring, I helped friends sell their house. It had fresh paint and new floors. After it was staged we listed their home for $265,000 (blue line).
My listing sold in only 5 days with 9 offers above list price for $274,000.
Another listing came up across the street at about the same time.
That listing (red line) started with an initial list price of $300,000, which was higher than anything that sold in the neighborhood. It was not upgraded, not staged, not painted. Some of the original furniture was still in the house.
It sat on the market for 8 months. They painted and staged it after 2 months and reduced the price repeatedly. It finally sold at the end of the year for $252,500.
I am sad to see how that owner lost $50,000, incurred 8 months of holding costs, and still had to pay for painting and flooring (which they should have done before the listing).
Unfortunately, I see this happen all over town. Sellers get greedy and fall into the “overpricing” trap.
Without the help of an experienced Realtor and a proven selling strategy they lose.
How Should You Set the Initial List Price?
Most sellers want top dollar for their property. They are tempted to start with a high list price, just to test the market and not leave money on the table. However, overpricing can be extremely costly in the long run.
This strategy does not work! It often results in a lower sale price and longer holding time than if you would price the property correctly at the beginning.
It may be counter intuitive, but
the best initial list price for a home is just below market value.
How Buyers React to Perceived Bargains
When buyers and their agents see a listing below market value, they immediately think it’s a great deal and rush to set up a showing.
A lower list price attracts more buyers. When you have more competition buyers will engage in a bidding war. The best offer will reflect the true market value of your property.
Don’t hire an agent who claims they can sell your house for more than the market will bare!
Before you list your house, call me at (614) 975-9650 for a realistic pricing strategy.
Susanne Novak has been a Realtor since 2007. She is the broker and owner of RE/MAX 24/7 in the Dublin Historic District. Susanne typically helps 50-60 families each year with their real estate needs. She's your trusted advisor when you search for your dream home, and a skilled negotiator when she lists your property to get top dollar when you sell.