One of the first decisions you will need to make when selling your home is what price you want to sell it for. This is also one of the most important decisions you will make. Here are some reasons why the first listing price affects the entire outcome of their home sale.
A Too-High Price Can Exclude Your House
Some home sellers mistakenly think they should grossly overprice their home in order to leave plenty of room for bargaining during the negotiation stage. While a certain amount of bargaining does often occur, falsely inflating the value of your home inadvertently excludes your property from online search results.
It is estimated that 80% of homebuyers search online for houses to buy. Those buyers enter price search parameters that they feel they can comfortably afford. If you overprice your house, your listing won’t even show up in the search results of people who likely would be able and willing to pay you the actual value for your home.
Essentially, you are removing your house from their radar screen, making it invisible to an entire group of qualified buyers.
Properties With Price Reductions Appear Distressed
Another reason it is important to price your home correctly is because if you overprice your home and then have to drop the price due to a lack of interest, your house now appears to be a distressed property. When you see items heaped together in a bin with “price reduced” on the side, don’t you assume they are damaged goods.
It is the same with a house listing that’s labeled “price reduced.” It does not matter if your house is a mansion. With a price drop, buyers will automatically assume something is wrong with it.
The Appraisal May Ruin Your Deal
Even if you succeed in luring someone who’s willing to overpay for your house, you still need to go through the appraisal process so your buyers can secure financing. When the appraisal comes back with a much lower figure, the buyers will have difficulty obtaining a loan because lenders won’t pay over-market prices. Your whole deal could fall apart at the last minute due to a failure to price right when selling your home.
Real estate agents make pricing suggestions based on hard data, like recent comps in the neighborhood. Your best bet is to rely on your real estate agent for advice about pricing your home right to sell.
Case-Shiller’s National Home Price Index showed little change in April as home prices rose by 0.10 percent to a year-over-year average of 4.70 percent. The 20-City Home Price Index showed corresponding home price growth of 0.10 percent to 4.00 percent year-over-year.