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CT. Real Estate for You - PRICING YOUR PROPERTY |
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It is when your home first goes on
the market that you will see the
most interest and activity. New
listings always capture the interest
of the real estate agents and
current buyers, especially when they
are well priced. |
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The Dangers of Overpricing |
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► Fewer
showings
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► Fewer
serious offers
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► Won't
make broker's "show list"
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Financing and appraising
difficulties for buyers
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Property used as a "decoy" to
help sell other homes
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Property becomes invisible to
the market
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EVALUATION |
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PRICING TIPS -
When Your Selling Price is too High,
Beware! |
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Meeting With Realtors
So
you’ve decided to sell your home and have a fairly good
idea of what you think it is worth. Being a sensible
home seller, you schedule appointments with three local
listing agents who’ve been hanging stuff on your front
doorknob for years. Each Realtor comes prepared with a
"Competitive Market Analysis" on fancy paper and they
each recommend a specific sales price.
Amazingly, a couple of the Realtors have come up with
prices that are lower than you expected. Although they
back up their recommendations with recent sales data of
similar homes, you remain convinced your house is worth
more.
When you interview the third agent’s figures, they are
much more in line with your own anticipated value, or
maybe even higher. Suddenly, you are a happy and excited
home seller,
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FOR A FREE
HOME
EVALUATIONmoney. |
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A Sales Practice Called "Buying a Listing"
If you’re like many people, you pick Realtor number
three. This is an agent who seems willing to listen to
your input and work with you. This is an agent that
cares about putting the most money in your pocket. This
is an agent that is willing to start out at your price
and if you need to drop the price later, you can do that
easily, right?
After all, everyone else does it!
The truth is that you may have just met an agent
engaging in a questionable sales practice called "buying
a listing." He "bought" the listing by suggesting you
might be able to get a higher sales price than the other
agents recommended. Most likely, he is quite doubtful
that your home will actually sell at that price. The
intention from the beginning is to eventually talk you
into lowering the price.
Why do some agents "buy" listings this way?
There are basically two reasons. A well-meaning and hard
working agent can feel pressure from a homeowner who has
an inflated perception of his home’s value. On the other
hand, there are some agents who engage in this sales
practice routinely.
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HOME
EVALUATIONalre |
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What Happens Behind the Scenes
If you
start out with too high a price on your home, you may
have just added to your stress level -- and selling a
home is stressful enough. There will be a lot of "behind
the scenes" action taking place that you don’t know
about.
Contrary to popular opinion, the listing agent does not
usually attempt to sell your home directly to a
homebuyer. That would be inefficient.
Listing agents market and promote your home to the
hordes of other local agents who do work with
homebuyers, dramatically increasing your personal sales
force. During the first couple of weeks your home should
be a flurry of activity with buyer’s agents coming to
preview your home so they can sell it to their clients.
If the price is right.
If you and your agent have overpriced, fewer agents will
preview your home. After all, they are Realtors, and it
is their job to know local market conditions and home
values. If your house is dramatically above market, why
waste time? Their time is better spent previewing homes
that are priced realistically.
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HOME
EVALUATIONalre |
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Dropping Your
Price...Too Late
If you
start out with a high sales price, then drop it later --
your house is "old news." You will never be able to
recapture that flurry of initial activity you would have
had with a realistic price. Your house could take longer
to sell.
Even if you do successfully sell at an above market
price to an uninformed buyer, your buyer will need a
mortgage. The mortgage lender requires an appraisal. If
comparable sales for the last six months and current
market conditions do not support your sales price, the
house won’t appraise. Your deal falls apart. Of course,
you can always attempt to renegotiate the price, but
only if the buyer is willing to listen.
Your house could go "back on the market."
Once your home has fallen out of escrow or sits on the
market awhile, it is harder to get a good offer.
Potential buyers will think you might be getting
desperate, so they will make lower offers. By
overpricing your home in the beginning, you could
actually end up settling for a lower price than you
would have normally received.
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HOME
EVALUATIONalre |
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Realtors Talk to Each Other
If you
start out with a sales price that is too high, there is
a high likelihood you interviewed other agents. They
didn't get the listing, of course. They got "aced out"
by someone telling you what you wanted to hear.
If your listing agent routinely engages in "buying"
listings, he has probably aced out scores of other
agents in the same way. Being human, Realtors talk to
each other. If they don’t like your listing agent, not
as many of them will be showing your home.
In short, you may have ended up with an agent who was
good at selling you, but not good at selling your house.
And you’re going to pay them a commission for it.
It is human nature for you to want the highest price for
your home. However, when you choose the agent who
promises what you want to hear, it often leads to stress
and frustration. Most of the time, it will take you
longer to sell your home. Possibly, you will end up
selling at a lower price instead.
Or maybe as a result of reading this article, you will
choose one of the "good" Realtors in the first place.
They are out there, you know.
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FOR A FREE
HOME
EVALUATIONalre |
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