Are you thinking about selling your home? Are you the executor of an estate and must now liquidate the estate and sell a home?
People always ask us what is the single most important thing that we should consider and or do when trying to sell a home.
You want to know what the secret to selling your home? Well it’s proper pricing… right up front; right from the beginning. Pricing your home properly to begin with is without question the single most important factor to selling your home for top dollar. It is a delicate balancing act that, when done properly, positions your home perfectly in the marketplace to sell for the absolute highest possible price. When the home is priced too low, it will sell quickly but for less money than it should. When the home is priced too high, it will sit on the market for a long period of time and ultimately sell for less money than it should.
The biggest mistake we see by owners trying to sell on their own or even by real estate agents, is overpricing a home to start with and having to reduce the price multiple times. When a home is listed for sale, it reaches the highest number of potential buyers the first few days it is on the market.
If a home is dismissed as being overpriced early on, you will lose potential buyers. Unlike years ago, todays buyers are not willing to put a lot of money into a house for upgrades. If a home needs updating in todays market and buyers are not able or unwilling to spend the money for this type of work, then the listing price of the home should be discounted accordingly to reflect the amount of work that will need to be done.
This could be significant. Upgrading kitchens could cost between $25,000 to $75,000. Bathroom upgrades could cost between $5,000 to $25,000. Carpeting upgrades could cost between $4,000 to $10,000. A seller cannot expect to sell their home at full retail value when thousands of dollars of work will be needed for upgrades just to bring it up to par with market comps. This is often times one of the biggest reasons a home will not sell and buyers will just walk away and move on to purchasing another property.
Typically, buyers will flip through listings online; they look at the main home photo first, then they look at the price. If the potential buyer does not like either of those items, they will move on to the next listing. Put yourself in their shoes. Pretend you are a buyer; be honest: How many times have you done that? You look, get turned off and move on right? The answer is yes, we do it all the time.
The challenge is pricing the home properly. You can use some online tools and websites, you can see how much a neighbors home is listed for and price a home the same, or you can just price the home at the amount of money you “want” to get (or need to get) for it. We are sorry to tell you that none of those methods work, and they certainly will not help you sell a home for top dollar.
Lets take a quick look at why these methods don’t work. Many people will start with any number of online home review sites. They are all well-marketed tools. Did you know that they are in the business of generating leads for real estate agents? The problem is that they are not usually accurate. Their entire system is computerized and based off of public records that are sometimes incorrect. There have been many occasions when we have come across public records in which the number of bedrooms, bathrooms or the square footage of a home has been incorrect. All of these errors lead to inaccurate results.
In our opinion, the biggest issue with these generic online home search sites is their inability to take into account items such as home features, upgrades and the condition of a property. Those items require an actual human to take an in-depth look at your property and determine how it truly compares to other properties. Once that determination is made, proper adjustments to the value are made. We are not here to bash online generic home sites; far be it from us. They are fine for a broad brush estimate. A home is most likely the single largest item you will sell in your lifetime. Do yourself a favor and do not use these generic online home sites as a pricing tool for your home – it could end up costing you tens of thousands of dollars.
Looking at how much a neighbors home is listed for or seeing how much other properties currently for sale are listed for does not work because we want to know exactly what homes have sold for, not what they are attempting to sell for. The only thing a home still for sale or “active” tells us is that the home is probably overpriced. The most accurate way to predict what a home will sell for is by finding out what similar homes sold for.
Listing your home for how much you want or need to get is wrong. Truthfully, it does not matter what you want or need to get for a home. That is a poor pricing strategy. The fact is, a home is worth exactly what a qualified buyer is willing to pay for it. What you want or need has no bearing on that.
The key to selling a home for top dollar is to strategically price the home right… right from the beginning. To do that, you need to take a detailed look at similar homes that recently sold in the area. Hire a real estate agent who is an expert. Know the average current days on market for the homes that sold. Find out how many days on market on average homes that are currently for sale and recently sold are averaging. Also find out how many price reductions were needed and how much those price reductions were.
We pride ourselves on providing our clients with a complete comparative market analysis (CMA). This will allow us to accurately compare a client’s home to recently sold homes on the market. The trick is to price a home so it is considered to be the best value in the price range.
Remember that if a home is overpriced compared to the other homes on the market, all you are doing is helping other people sell other homes by making their homes look like a better value. The guidance of a high-quality real estate agent can help homebuyers land on the most strategic price and get a home sold for top dollar.
If you think your home is worth more – then take the challenge. I will come to you, and you show me from house to house why your property is worth more – and I will list it for the price you ask. If you get an offer and your house does not appraise for what you ask – you owe me $100.
Lastly, and equally important is please do not forget that virtually all home buyers will need the assistance of a bank or mortgage company when buying a home. What does this mean to a seller? It is extremely important for a seller to understand that even if they are lucky enough to get a buyer to agree upon a purchase price that is higher that market comps, the deal still may not go through.
Because the buyers bank or mortgage company will come out to the property and do an independent appraisal. If they find that the property is overpriced and out of line with market comps they will reject the deal.
Because they do not want to be on the ‘hook’ if the buyer goes bad somewhere down the road. The banks do not want to ‘stuck’ with a home that is overvalued and thus ‘underwater.’ So, again, we repeat that the single most important thing that a seller can do is to price their property correctly and in line with market comps from the very beginning. A successful seller needs to not only think about themselves, but also think about the buyers and their mortgage company and the probability of successfully completing the deal where all parties are satisfied and made whole.