As we speak, we are currently in a seller's market; inventory is extremely scarce and there are way more buyers than sellers in the market. This is great for sellers because it means that they are able to get top dollar for their home. However, even though their home is in higher demand, it does not mean they can price it extremely high and expect to sell it without a problem. Pricing your home correctly in this current market is just as important now as ever!
It is pretty common for a homeowner to think their home is worth more than it actually is. This is understandable because it has sentimental value to them and their family, but it is important to look at it from a buyer's perspective. Buyer’s these days are pretty savvy and well educated on the conditions of the real estate market and even if they are not, they are likely working with an agent who will be able to spot an overpriced home from a mile away.
Why is overpricing your home so bad? Pricing your home too high has been shown to deter buyers and result in your home staying on the market longer. A buyer is less likely to make an offer on a home that is overpriced because it could be an indication to them that the seller has unrealistic expectations and could be difficult to work with. Another way this could deter buyers is say for example your home is worth $300,000- you want to list it at $315,000 because in your mind the worst case scenario is someone offers you lower than that (closer to the 300k range). By doing this you are completely cutting out someone who may have a 300k budget. How? Typically when someone views homes online, they will plug in the top end of their budget and look at properties that are at that number or below. Therefore by overpricing your home, you’ve potentially eliminated a whole pool of buyers who could’ve been interested and would have increased the level of competition for your home.
Even if you do get someone to offer your higher asking price it can still be dangerous depending on their financing. Before a lender fully commits to giving someone a loan, he or she is going to order an appraisal. If that appraisal comes back lower than what the buyer/seller agreed upon, the lender is not going to give the buyer a loan in that amount- a lender will never give someone a loan that is higher than what a property is valued at.
On the flip side, it can also be dangerous to list your home for less than it’s worth. Many times when a buyer sees an underpriced home they think there might be something wrong with it and it deters them from viewing it.
It is always best to find that sweet spot. There is always going to be a certain range of where you should list your home; it is okay to list your home on the high end or low end as long as it falls within that specific range. Pricing it low or high within that price range both have their benefits. Pricing it on the low end of the range can result in more interest and raises the chances of a bidding war which often results in a seller getting over asking price. Pricing it on the high end of the range can also be great because you are asking for the highest number possible right out of the gate but you are still operating within a window that’s within reason.
Partnering with an agent and having them do a comparative market analysis is one of the best ways to come up with a good range for your home. An agent will also be able to explain to you the pros and cons of each option so you are able to maximize your home by receiving multiple offers and the highest dollar possible. If you’re looking to sell your home and you need some guidance, reach out to me. I’d love to assist in any way possible!
Cell: 717-572-0629 call or text
Email: kyle@lancliving.com