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 homes 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 sellers 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.
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 whatquestions 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
65One 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 homes 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!
Source: Kyle Hiscock, The Rochester Real Estate Blog