6 Home Pricing Myths Debunked
Every seller wants to sell their home for the best possible price – and hopefully as quickly as possible. But accomplishing these goals requires taking a certain approach to the home sales process that many owners are unaware of. Without experience selling homes and an understanding of how the market works, it can be hard to get the results you want.
The following six myths are commonly accepted as truth among many homeowners. You do not want to make the mistake of thinking these things are true, because they aren’t. In fact, belief in these myths plays a large part in why so many sellers fail to get the most out of their home sale. By believing these top 6 myths about pricing a home for sale you are setting yourself up for failure.
Getting your home priced accurately starts with picking a real estate agent you can trust. Keep in mind the best agents are usually the ones who don’t need a sale. You will get far better advice from someone who isn’t starving for money.
Real Estate agents that need to make a sale tend to think about their pocketbook first and not giving the best possible advice. Recently I wrote about things to expect from your real estate agent when selling a home. The first item on the list is setting the correct list price!
Waiting Longer Makes Better Offers Appear
If you are willing to wait long enough and hold out for a good offer, it will come. This is a common assumption among many people. In fact, I probably have heard “we have all the time to wait things out” more than I care to in my real estate career.
The opposite of the above statement is how real estate sales work the vast majority of the time – the longer your home stays on the market, the worse the offers will get or none at all. As a home sits on the market week after week, buyers start to wonder what is wrong with it. Why has it taken so long to sell? A lot of buyers may spend months looking through listings, so they can see your house when it first goes up, and then the next month, and then the next. Eventually, they assume that you are either pricing the home too high, or there is something seriously wrong with the property.
Homes sell for the most money when they are on the market for less than 30 days in most markets.
The number one question all buyers ask their real estate agent is “how long has the home been on the market.” Buyers ask this question for one reason – they want to know the likelihood a seller will negotiate and by how much. Right or wrong, the general assumption with most buyers is the longer a home is for sale, the most negotiating room there should be. This is why pricing a home correctly out of the gate is so critical.
Time on market is not a sellers friend! As the days on market increase, history shows us that the gap between the listing price and sale price grows. The risks of overpricing a home are substantial. Many sellers just think they can drop the price later, and it won’t matter. It will matter! If you overprice your home, the odds dramatically increase that you’ll sell it for less than you would have if priced correctly on day one.
Quick Offers Means The Home is Priced Too Low
A quick offer is an indication that you priced the house too low. This statement is one of the more common pricing myths among sellers. A quick show of hands by all the real estate agents reading would tell you they have heard many times from sellers that “they gave their home away” because it sold quickly. This is 100 percent false.
The moment your home is listed on the market, it will be seen by multiple buyers. Depending on the area, it could be hundreds or even thousands of shoppers that at least skim by your listing as they filter through all the possible homes they could buy. If you have priced your home right, many of these buyers will be interested in it immediately. These buyers may have been shopping for weeks or months, looking for a home like yours at a competitive price point.
With the right price in the right market, you could get multiple offers in a very short amount of time. This is especially true when there are a limited number of homes available to purchase. Inventory levels will often dictate how quickly a home receives an offer.
You want offers on your home – from multiple buyers if possible. With multiple offers, you can encourage competition among buyers and hopefully get more for your home. You obviously do not want to price your home lower than it is worth, but you do want to price it low enough to get buyers excited and making offers. Hopefully the contract comes right after your Realtor puts up the listing!
The key is finding a real estate agent you can trust who knows how to price a home for sale without leaving money on the table!
Unique Marketing Brings Higher Prices
If your home is marketed correctly, it will fetch a higher price. This is a 100 percent true statement but that doesn’t mean outside of the box, or crazy marketing ideas make homes sell for more. Have you ever run into the right intention of some sellers who think they know more about good real estate marketing than you do? I know I have! Have you ever heard something like this “Bill do you believe that we could run an add in the NY Times this weekend?” The internet doesn’t seem to be cutting it.
Of course, the internet isn’t cutting it because your home is priced $20,000 higher than it should be! The internet does not sell overpriced homes and neither will an add in the NY Times!
The market value of your home has nothing to do with outside the box real estate marketing. Marketing is all about visibility and attracting the right kind of buyer. With an efficient marketing plan, your home listing will find its way in front of thousands of well-qualified buyers.
Good marketing will display all the best qualities of your home and encourage potential buyers to look further into the listing and to schedule a viewing. But marketing does not change the value of your home. If your home is overpriced, the best marketing in the world won’t cure that.
We Just Need The Right Buyer
“We just need to find the right buyer to sell our home for a great price.” Another misconception when it comes to the sale of a home. I am sure if I waited long enough dating a super model would be easy for me too. Fat chance!
This myth is similar to #1, but the emphasis is on the individuals considering your home instead of time. But just like more time will not encourage higher offers, finding the one-in-a-thousand buyer that will overlook the advice of his or her Realtor and ignore the realities of the market is extremely unlikely.
Buyers do not tend to break very far from the group, and for good reason. The market is what it is because of supply and demand, of all the available houses and all the possible buyers and all the transactions taking place. For a purchaser to go far outside of the norm and buy a home for far above market value is unusual because it is not a sound financial decision.
Another thing to consider about holding out for an individual buyer is that the only kind of buyer that can buy a home that is priced far too high is a cash buyer. Lenders verify the market value of every home they lend money on to ensure that the bank is protected financially. Even if a buyer is foolish enough to try and buy an overpriced house, there is a high chance that the lender will deny the loan due to the price. This will be due to a low appraisal value on the property.
We Need to Price Our Home With More Negotiating Room
Needing to price a home with significant “negotiating room” is a very common pricing myth among sellers.
Negotiation is an essential part of the sales process; there is not denying that. Your Realtor should be prepared to negotiate on your behalf to help you get what you want out of the sale, and to keep you from being taken advantage of. But pricing a home excessively high is not necessary to create an opportunity to negotiate and reach a middle ground. Yes, you can expect buyers to make an offer below your original price in many instances. Buyers will expect to have to negotiate up. But the negotiating room does not have to be substantial.
Trying to price to create a lot of negotiating room will result in you never getting the chance to settle in the first place. When a home is priced too high, it will be avoided by buyers and their agents. They will all be waiting for the price to go down to something reasonable. If you wait very long, you will run into the problem of buyers thinking something is wrong with your house.
Talk to your real estate agent about how to price your home and about what will happen with negotiations. Your Realtor can help you understand what price will be competitive for your home, and will help you decide on the minimum offer you will accept. Then your agent will list the home at slightly higher that your lowest acceptable offer.
Zillow Says It’s Worth More
“The value you have come up with for my home can’t possibly be right because Zillow thinks it’s worth X.” Your mom thinks you are the best looking man or woman in town too. Let us get one thing straight – you have better odds of seeing Bigfoot than an accurate Zillow value on your home. The fact of the matter is Zillow’s values are all over the board. I have personally seen homes as much as $150,000 both over and under the actual value. So when someone asks me whether a Zillow home value is accurate, the look on my face is usually one of disgust.
If you have been drinking the Zillow Kool-Aid, you need to stop. In the article above you will see a comprehensive explanation why a “Zillow estimate of value” is not something, you should ever consider useful.
While Zillow has an excellent site for looking at homes, as well as other data points, their Zestimate is their weak spot. In fact, it is surprising they have kept this feature with all the backlash they have received from both real estate appraisers and agents alike. This is one real estate pricing myth worth dumping fast!
Another myth that some sellers believe is that a home’s assessed value has anything to do with market value. This is among the many ways sellers end up overpricing their home. What’s funny about this myth is that only those that have a higher assessed value than the real value believe it. Rarely do you ever hear a seller questioning the value when the assessed value is super low.
Pricing a home properly is a skill and an art. The price is also the most important consideration for getting your home sold. If you get the price, wrong nothing else you or your agent does will matter. In fact setting the right price is 75% of the marketing for your home. The correct price attracts the right buyers. So how do you know your home is overpriced? Glad you asked! In the article, you will see ten tell tail signs your home is not priced as it should be.
Additional Helpful Articles on Home Pricing & Selling
- Top real estate myths debunked via Rochester Real Estate Blog.
- Price your home correctly from day one via Realtor.com.
Use these additional resources to make sound pricing decisions when selling your home. Remember the price you set on your home will have a great impact on your success. Don’t make the mistake of overpricing your home like so many others.
About the Author: The above Real Estate information on the top 6 myths about pricing a home for sale was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 29+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.