There is one mistake 90% of all sellers make when they are pricing their home for sale. Many sellers say that they want to price their home high in order to have “negotiation room.” While I completely understand the logic behind this, I strongly recommend not to do this. Here is why: What this actually does, is lower the number of potential buyers that see the house. Most buyers search for homes by looking at listings at a certain price point, or below. So, pricing high simply means that you are locking out a chunk of the market. And we know that limiting demand like this will negatively impact the sales price of the house.
When pricing your home for sale, don’t make this mistake!
Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If a seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even know your listing is available, let alone come see it!
As I said, I understand why sellers are doing this. They want to sell their home for the highest price possible. I often hear “we can always come down later”, meaning that if there are no offers, they will lower their list price. But all this does, is weakening their negotiation position and actually devaluating their home. Think of a home that has been on the market for more than 90 days and had two price reduction. Wouldn’t any buyer think that there might be something wrong with that home? That the seller is desperate to sell since she already lowered the price twice? Most buyers will put in a low offer on a listing like this.
Here is how to price your home for a quick sale
A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the “right” to purchase your house.
Take a look at the chart at the top of this page. The higher you price your home over its market value, the less potential buyers will actually see your home when searching.
Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation? In Pinellas County, I have been in multiple offer situations frequently. This is a great situation to be in, because you can go back to these buyers and tell them that there are multiple offers. You then ask them to rethink their offers and come back with their highest & best offer within 24 hours. In most cases, this leads to a bidding war and many sellers have been able to sell their home above listing price that way. Don’t you like that?
Price your home right from the start
Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Then, set a realistic price point and list at this price. You can always turn down any offer below that price. I can help you understand the market situation and give you my recommendation for a realistic price point. Just know that I will always tell you what you need to know rather than what you want to hear.