Over-Priced Houses Sell Slower and For Less

Any real estate agent will tell you that pricing is extremely important in today’s real estate market.  A buyer will perceive value in the house that is priced right. Often times you will see buyers enter into a bidding war with others just to get the house that they see as being priced aggressively. On the flip-side over-priced houses will languish and will usually sell for less if they sell at all.

When you consider the abundance of the bank-owned foreclosures one thing you can take away is that banks know how to price a house to sell quickly. Their aggressive pricing strategies are designed to unload the house quickly and for the most money. As a seller you obviously do not need to take such aggressive measures but if you need to sell quickly you need to price competitively.

Chances are you’re always going to hurt yourself by over-pricing.  Why do I think that?

Do you recall the times when a great deal has come on the market. You and everybody else rushed to place an offer because you knew the price was great. But you soon found out there were a dozen others who had also placed an offer on the property and it was usually above the asking price.

The “great sale price” created an auction type affect and it attracted buyers and got them very excited. This is the same strategy that banks are using to sell quickly and for the most amount of money. In my opinion this is a winning strategy.

If pricing is so important why don’t sellers do it?

“The I think I can get 40K over market value” syndrome: Even if someone were excited enough about your house to pay 40K over market their lender won’t make the loan, especially if the value isn’t there. Simple put; No Loan, No Buyer, No Sale. You need to consider not just what you think the house is worth but what the bank is willing to loan. Consider getting your house appraised by a professional.  It will not only shed light on what a neutral third party thinks it’s worth but you now have a document that can help justify your asking price.

“The I invested X amount on this” syndrome: Often times we invest heavily on improvements that do not return full value. When taking improvements into consideration be aware that some improvements will have a higher return on investment that others. Do your research so that you know which improvements to consider and which ones are not what you thought. Kitchen and bathroom improvements are great and the return on investment is in the 75% to 85% range. Pools , roofs, septic systems return a lots less than what you’ll invest in them. The return is usually less than half.

All too often fear and or greed prevent us from making smart pricing decisions. Don’t think you are alone either, as Real Estate Agents we are just as guilty of over-pricing homes. It seems that when it’s our turn to sell a house our “market know-how” becomes a distant memory and we succumb to bad judgment. It doesn’t have to be that way.

Both sellers and agents should do the market research to ensure the listing is priced correctly. If you can justify the asking price with recent solid data (sold comparable, appraisal etc) than you stand an excellent chance of selling the house quickly and for the most money.

To summarize: An Over-Priced House will simply stay on the market longer and usually sell for a lot less than if it had been priced correctly from the very start.

For a Detailed Pricing Analysis of Your Home Give Us a Call at 405-538-7168 or Use This Form

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