One of the biggest challenges in today's real estate market is the continued demand for a shortage of home for sale properties. Because of the shortage, many homeowners who are looking to sell are considering pricing their properties higher than recommended.
For real estate professionals, it is important to advise homeowners to price properly, as opposed to trying to make them happy; if a seller marks their price too high, there may be consequences later. Homeowners who do not sell quickly are sometimes forced to lower their prices, which in term may cause buyers to stray.
University-distinguished Faculty Award recipient John Knight from Eberhardt School of Business - University of the Pacific researched the cost (in time and money) for a seller who price their home too high initially and were forced to lower.
In his article entitled “Listing Price, Time of Market and Ultimate Selling Price” published in Real Estate Economics, Eberhardt revealed that homes whose prices were revised later for a lesser price tended to be sold for less, compared to homes that were priced accordingly. He also revealed that the longer a home stayed on the market, the lower the selling price would be.
When homeowners have the mindset of “I'll lower the price later”, there may be consequences. Home buyers may think that something is wrong with the home, or they may take advantage of a desperate home seller. They may also low-ball the price and force homeowners to accept a much lower price than they initially hoped for.
A lot of home sellers may consider that pricing high will allow for “negotiation room”, however real estate professionals should warn home sellers that this tactic may eventually limit the likability of a home being sold. When one limits the demand for their home, it can create a negative impact on the sales price of a home for sale.
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Consider this: It is becoming more common for potential home buyers to look for properties online, and here they have the opportunity to enter in their desired price range. A seller who looks to sell his home for $400,000 but has it listed for $425,000 for “negotiation room” will not even reach buyers who have entered in a preferred price range of $350,000 - $400,000.
The chart below displays how the higher you price your home over its market value the less chance potential buyers will actually see your home when searching.
The best strategy a home seller can adopt is to have the home priced properly at the very beginning, so that multiple offers are made on your home. This will allow potential buyers to compete against each other for the “right” price for your home.
Quite simply, if only one offer comes in for your home, you will have to settle into whatever demands the buyer has. In contrast, having multiple offers creates a better chance for you to choose which offer you prefer the most.
It helps to have a grasp on the current real estate market, and to have knowledge of the rest estate dynamics in your neighborhood. Being able to compare your home for sale than others in the area will help you get an offer a price that reflect its value and brings in more potential buyers.
Let us help you put together a successful sales plan for your home, so that you can sell at the price you want! Are you hoping to sell your home in Charlotte? Send us a message here or call us at (704) 997-3794 and one of our real estate professionals will be happy to assist you.
Having trouble selling your current home? Here is an article to know what seems to be lacking on your sale. Read 13 Reasons Why You Should Not Sell without a Real Estate Professional's Help.
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