Incorrect Pricing -
The Worst Home Selling Mistake a Seller
Can Make
We Want More Money
When the average seller sits down to interview real estate
agents, it's easy to get caught up in the excitement over
choosing a sales price. More money means more financial
opportunities for the homeowner. Perhaps it means the seller
can afford to buy a more expensive home, help pay for her
child's university education or take that greatly overdue
vacation. Unfortunately, uninformed sellers often choose the
listing agent who suggests the highest list price, which is
the worst mistake a seller can make.
Establishing Value
The truth is it doesn't really matter how much money you
think your home is worth. Nor does it matter what your
agent thinks or ten other agents just like her. The person
whose opinion matters is the buyer who makes an offer.
Pricing homes is part art and part science. It involves
comparing similar properties, making adjustments for the
differences among them, tracking market movements and taking
stock of present inventory, all in an attempt to come up
with a range of value, an educated opinion. This method is
the same way an appraiser evaluates a home. And no two
appraisals are ever exactly the same; however, they are
generally close to each other. In other words, there is no
hard and fast price tag to slap on your home. It's only an
educated guess and the market will dictate the price.
Is it Too Low?
Homes sell at a price a buyer is willing to pay and a seller
is willing to accept. If a home is priced too low, priced
under the competition, the seller should receive multiple
offers to drive up the price to market value. So there is
little danger in pricing a home too low. The danger lies in
pricing it too high and selecting your agent solely on
opinion of value.
How It Starts To Go Wrong
We know of a seller of a home that didn't even interview
real estate agents. She plucked the first one off the
Internet because, "He looked like such a nice guy." He
priced her home at R1.3 million. This agent never heard the
local agents chuckling behind his back because he worked in
a different suburb. After 90 days, the house was still not
sold.
Continues To Go Wrong
The next agent, also from another area, suggested to
sell the home at R1.1 million. Months passed. Eventually the
price dropped to just under R900,000. Still no takers. A few
lookie-loos, but no serious buyers.
More Than a Year Later
By the time the last agent was hired to sell this home, the
seller had grown weary and exhausted. It was now 12 months
later. Together, the seller and the agent priced the home at
R695,000. It immediately sold for all cash. The sad part is
the comparable sales in the neighbourhood fully justified a
price of R835,000, but the home had been on the market for
too long at the wrong price, and now the market had
softened.
Protect Yourself
The question is how much money have those houses that don't
sell cost the sellers? The financial loss often exceeds the
extra mortgage payments paid and goes beyond the
uncompensated hassle factor of trying to keep a home
spotless during showings. It affects the rand value that a
buyer ultimately chooses to pay because it's not a fresh
listing anymore. It's now stale, dated, a market-worn home
that was overpriced for too long. Don't let it happen to
you. Don't be that seller of an overpriced property. Price
it right to get it sold.
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