Accurate Pricing: The Key to Selling Your Home
Facts You Must Own
A home that fails to sell usually boils down to one factor: accurate pricing. It is a common mistake for sellers to overlook the math and venture beyond the local MLS to determine their home’s current market value. Accurately identifying the actual market value is crucial for successful marketing. Selling a home can be challenging, especially when homeowners are tempted to overprice their property. In this article, we explore reasons why overpricing your home is a bad idea and the potential consequences that can arise from doing so. Bottom line, accurately pricing your home for sale is the key that unlocks selling success.
Fewer Interested Buyers
When a home is not accurately priced, it will not attract potential buyers. Buyers tend to be well-informed about the current market value of properties. It is important to know and compare prices of similar homes in the area. When buyers find that a home is overpriced, they choose to look at other options. This leads to fewer interested buyers and longer listing times for the seller.
Longer Time on the Market
When unsold properties stay on the market for an extended period, they can lose its appeal and become less attractive to potential buyers. This can create a negative perception of the home, and people may start to wonder why it hasn’t sold yet. As a result, the longer a home sits on the market, the more it can become stale and unappealing to potential buyers. This can lead to a vicious cycle, where potential buyers start to avoid the home simply because it has been on the market for too long.
Days on market is a crucial metric in the real estate industry. It measures the duration of time that a property has been listed for sale, starting from the day it is officially listed until either an offer is accepted or the agreement between the real estate broker and the seller ends. This metric is also known as “time on market” or “market time.” On most real estate websites, you can view the cumulative time a home has been for sale, regardless of the agent, which is referred to as cumulative days on market.
Pricing Your Home for Sale
While condition, location, and market conditions can influence days on market, a home priced too high tends to stay on the market longer, while accurately priced homes in great locations and good condition typically sell quickly. Homes in poor states of repair or undesirable locations may linger on the market. The one area sellers’ control, the price.
Accurate Pricing i.e. the Buyers Perspective
For buyers, a short number of days on the market in an area signals a seller’s market, where decisions must be swift. Consequently, longer days on market may indicate more of a buyer’s market, allowing more time for decision-making. For sellers, if a home stays on the market longer than comparable listings, a price reduction or other concessions may be necessary. Relisting currently does not reset the days on market count.
Negative Perception
Days on market provide valuable insights, understanding this metric can help you make informed decisions. Most importantly, what price will attract the most buyers in the shortest time. Furthermore, when a home spends a long time on the market, potential buyers might perceive it as undesirable. They may start to wonder why the home has not sold yet and become wary of making an offer. This can create a negative perception of the home, and fewer people may be interested in viewing it.
Additionally, when a home has been on the market for a long time, it can push the home down in the search results, making it harder for potential buyers to find. This can further reduce the home’s online appeal and make it even harder to sell. Therefore, it’s crucial to price your home correctly from the start and work with an experienced realtor to ensure that your home sells quickly and for the best possible price.
Reduced Visibility
One of the biggest pitfalls of a wrongly priced listing is that it is out of reach to potential buyers. When your home is overpriced, it may not show up in search results for buyers who are looking for homes in your price range. This means that you will miss out on potential buyers who may not even know that your home is on the market. An example of this, say an accurate listing price is $375k but the seller wants to list it for $385, buyers who are searching from 350k to 375k will never see the listing. This will reduce your home’s visibility, making it even harder to sell.
Appraisal Issues
When a buyer makes an offer on your home, they will likely get an appraisal which is part of nearly every finance contingency. For a buyer, this ensures that the price they are paying is reasonable. If your home is overpriced, it most likely will not appraise for the amount you are asking for. This means that the buyer may not be able to secure financing for your home, and the deal will fall through. If it is an FHA or VA loan, the buyer cannot pay more than the appraisal price. Consequently, if your home does not appraise for the asking price, you will need to lower the price or risk losing the sale altogether.
Who Ultimately Decides
Real estate appraisals in Florida are conducted by licensed appraisers who thoroughly assess the value of a property based on various crucial factors such as location, size, condition, and comparable sales in the area. The appraiser conducts an in-depth inspection of the property, taking note of any improvements or repairs that may affect its value. They also research the local real estate market extensively (the MLS) to determine the fair market value of the property. The appraiser then provides a detailed report that includes their findings and the final appraised value of the property. This crucial information is used by the lenders to decide if they are going to lend money to the buyer, consequently, appraisal is usually the final deciding factor about the outcome of most real estate transactions.
Wasted Time and Money
When you overprice your home, you may end up wasting a lot of time and money. Every day a home is on the market you are still incurring expenses, insurance cost, taxes, utilities, maintenance, and HOA fees. Additionally, your realtor also will be wasting money (time is always money to commission only salespeople). You may also need to pay for staging, repairs, and other expenses associated with selling a home. If your home does not sell, you will have wasted all of this time and money for nothing. This can be especially frustrating if you are trying to sell your home quickly.
In conclusion, overpricing your home is a bad idea that can lead to a host of problems. It reduces the number of interested buyers, increases the time your home spends on the market, leads to lower offers, reduces visibility, causes appraisal issues, and wastes time and money. If you want to sell your home quickly and for the best possible price, it is essential to price it correctly from the start. A licensed and experienced realtor can help you determine the right price for your home based on market conditions, comparable sales, and other factors all based on the most up to date data available, your local MLS (Multiple Listing Service).
What Homes Are Currently Selling for?
New Port Richey Florida, Real Estate Sold Properties
- 34652 Single Family Homes | 4.23.2024
- 34653 Single Family Homes | 4.23.2024
- 34654 Single Family Homes | 4.23.2024
- 34655 Single Family Homes | 4.23.2024 up to 500K
- 34655 Single Family Homes | 4.32.2024 over 500K
Market Conditions by County: Pasco, Hernando, Pinellas, Hillsborough, Manatee
Realtor John Keller has been an active real estate in the Pasco, Hernando, Pinellas and surrounding areas since April of 2002.
Further Reading
- 5 Common (but Terrible) Reasons for Overpricing Your Home (Realtor.com)
- Thinking About Overpricing Your Home? You’re Playing Russian Roulette (Forbes)
