Wednesday, October 21, 2015
Saturday, October 10, 2015
Ten Ways to Tell If Your
Home is Overpriced
If you're selling your home, you need to
understand that pricing your home correctly from the beginning is absolutely critical. The most common reason a home doesn’t sell is because it is overpriced.
Overpricing a home can create
damaging effects, period. The probability is that
if you price your home too high in the beginning, you will likely end up with
less money in your pocket, which is obviously not the goal when selling a home.
When selling your
home, it’s absolutely critical you do not overprice it. If you happen to make
the mistake of overpricing your home, it’s important that you identify this
mistake right away and make a change immediately.
How does a seller know
if their home is overpriced? There are actually many tell tale signs to know if
what you are asking does not meet market expectations. Below are the
top 10 signs that your home is priced too high. If you’re selling your
home and have experienced any of the tell tale signs below, make sure you make
an adjustment as soon as possible!
Your
Home Is Priced Much Higher Than Your Neighbors
Generally speaking, in
most neighborhoods, home values will be relatively consistent and close. One
tell tale sign to know that your home is overpriced is if your home is listed
$100,000 higher than other homes for sale in your neighborhood.
While it’s not
impossible that there can be homes that have a $100,000 value difference, it is
quite rare. One of the most common methods
that real estate agents will use to determine a home value is by
completing a comparative market analysis. A comparative market analysis, also
known as a CMA, is best described as a detailed
analysis of sold homes in the past 6 month time period in a given neighborhood.
If your home is priced
much higher than your neighbors, it’s very possible your real estate agent
didn’t complete a detailed analysis of value. If a CMA wasn’t completed, this
will not only lead to your home being overpriced, but also can create issues
with bank appraisals.
You’ve Had Very Few Or No
Showings
Excitement is a very
common emotion that is experienced by a seller. Sellers are generally happy
their home is listed for sale and being advertised all over the internet. Weeks
pass by and there have been a couple or even worse, zero showings.
That excitement now turns
to concern and frustration. If this sounds familiar, the likelihood that your
home is overpriced is high. If your home has been listed for sale for a few
weeks and you’ve had only a couple showings, you need adjust the price in the
hopes to generate some activity and showings.
You
Haven’t Received An Offer
In most real estate
markets, if a home is priced correctly a homeowner should receive at least one
offer within the first two to three weeks. If you haven’t received an offer
after a couple of months, this is a great way to know your home is most likely overpriced.
If your local real
estate market is currently in the midst a seller market, you should expect an
offer on your home within the first couple days on the market, if it’s priced
correctly.
Certainly there are
types of properties that may take longer than a couple days or a month to
receive an offer on but it is fairly rare. This exists typically when selling a luxury home or waterfront property.
You
Hired The Agent Who Recommended A Much Higher Price
In any given real
estate market, there can be hundreds to thousands of real estate agents. When
you are interviewing prospective Realtors to sell your home, it’s important
that you know what questions you should ask during
an interview.
One of the most
important questions relates to the pricing. It’s critical you understand how
the prospective real estate agent came up with the listing price of your home.
If you interview 3 real estate agents and one of the real estate agents
suggests a price that is $30,000 higher than the others, you need to know how
they came up with that number.
There are many real
estate agents who will “buy a listing” by suggesting a list price much higher
than the market value. If you made the mistake and hired the real estate agent
who suggested a much higher listing price, it’s very likely your home is priced
higher than it should be.
Neighbors
Homes Are Selling & Yours Is Not
One of the most
frustrating things for a seller is when the neighboring homes are selling and
theirs is not. If you’re selling your home and this is happening, this is a
sign that your home is priced too high.
A common statement
from homeowners who are selling their home is, “My neighbors home just sold for
$200,000 and mine is much nicer than theirs, why isn’t my home selling?”
One thing that many
sellers fail to understand is that there are so many things that can influence
the sale of a home. If this sounds familiar, a couple things to keep in mind
when it comes to comparing your home to your neighbors include;
·
Was your neighbors
home a different style of residence? Ex; ranch vs. two-story colonial
·
Was your neighbors
home larger?
·
Did your neighbors
home have high end upgrades and amenities? Ex; granite counters, building
additions, etc…
·
Is the location of
your home inferior or superior to your neighbors? Ex; corner lots or
private/wooded lot
·
Were the mechanics of
your neighbors home newer than yours? Ex; new roof, windows, furnace, etc…
Bottom line, if your
homes are selling in your neighborhood and yours is not, it’s probably
overpriced.
Open
Houses Are DUDS
One decision that
should be made by homeowners who are selling their home is whether or not they
want open houses. Statistically speaking, less than 2% of homes actually sell
as a direct result from an open house. Open houses do
provide potential buyers the opportunity to look at homes without feeling high
pressure that some real estate agents may place on them.
If you believe that open houses are necessary to sell your home,
what does it mean when the open houses are DUDS? If your real estate agent
markets the open house and not one person walks through the door during the 2
hour open house, then your price could be an issue.
Like most, buyers have
busy schedules, but a buyer will make the time to visit open houses if they are
interested in a home. A buyer will however not waste their time if they feel a
home is overpriced.
Internet
Traffic Is Very Low
The internet has changed real estate industry over the past
10-15 years. The majority of home buyers are
beginning their home search online. When a buyer is interested in a home they
see online, they will reach out to either the listing agent or will contact
their own real estate agent to schedule a private viewing.
One way to know your
home is overpriced is if there has been little to no internet traffic or
property inquiries. An experienced real estate professional who has a strong
understanding of how to market homes for sale online should be able to provide
traffic statistics as well as property inquiries.
Showing
Feedback Indicates Your Home Is Overpriced
One of the biggest
benefits to hiring a top real estate agent is they know the importance of
receiving feedback on their listings. Feedback from other real estate agents as
well as buyers who are viewing a property can be a huge help. If you’re not
receiving feedback from showings, it maybe time to think about firing your real estate agent.
Feedback is important
because it allows a homeowner the chance to correct things a buyer may object
to. For example, if a prospective buyer indicates the paint colors are too
“bright” it maybe time to consider repainting the room.
If the feedback from
showings is that a home is overpriced, this gives a seller the opportunity to
make an adjustment in the price.
You’ve
Received Low Ball Offers
Most overpriced homes
will not receive any offers, however, it is possible. Homeowners who overprice
their homes and still receive a couple of offers should feel somewhat
fortunate.
It’s a good chance
that if a home is overpriced, the offers received are “low ball” offers. If a home is
overpriced and offers are much less than the listing price, is it really fair
to consider them “low ball” offers?
If you’re selling your
home and have received several offers that you would consider “low ball”
offers, you may need to reconsider whether your price is appropriate.
Your
Home Didn’t Sell & Expired
Possibly the most
obvious way to know a home is priced wrong occurs when it doesn’t sell and
expires. If a home doesn’t sell and becomes an expired listing after 6
months, it’s not because there are not ready, willing, and able buyers in your
local market.
Instead of blaming it
on the lack of buyers or the local real estate market, it’s important a seller
looks in the mirror and realizes that their home was overpriced. Every home has
a price tag that is accepted to home buyers. If a home listing price is
relatively close to the number a buyer considers fair, it will sell and not
expire, period.
The
Importance Of Pricing In Real Estate
The number one reason
a home sells is because the price was right! Determining the list price of a home is such a critical
piece of the home selling “puzzle.”
If you put the correct
price on a home, it will sell in a relatively quick time frame. If you choose
to overprice your home, it will either not sell or will take several months to
sell. If you choose to overprice your home, remember that you will likely
receive less money for your home than if you were to correctly price it from
the beginning!
About the Author: The
above Real Estate information on 10 signs your home is priced too high was
provided by Kyle Hiscock.
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