Overpriced listings are no fun for anyone. Should you evaluate yours to be sure it is priced accordingly?
First of all, let’s discuss why many home sellers run into issues with an overpriced house & why they overprice. According to an ABC News article, many people who sell their houses hold sentimental feelings about their residences that interfere with listing it at the proper price. A seller might deem their house the best on the block, but that doesn’t necessarily hold true according to market standards. It’s great to have pride in your property, but the market is the big tell all for any listing at any time.
In a good market, there very well may be multiple bid situations which may result in an offer(s) above the list price. In a healthy market situation, a house or property that is overpriced won’t deter buyers. However, when the market is on a downward spiral or not fairing so hot, there are two main risks to an overpriced listing. Firstly, don’t expect to receive an offer for the list price. Secondly, a potential buyer can automatically be turned off by an unreasonably priced house and express no interest in even looking at it. This will create a stigma against the property; a reputation you’ll want to avoid.
To add, Jack Cotton of Cotton Real Estate in Osterville, Massachusetts says, “Just because I have a thing for platinum faucets and I spend several thousand dollars on them, doesn’t mean anyone else cares about platinum faucets at all, nor does it mean that the house will sell for $100,000 more than the house next door [on Cape Cod]…Market value is determined by how the home is valued by the market, not by one individual. It has nothing to do with how much a seller paid for the house; or how much he is hoping to profit from the house.”
9 warning signs your house may be overpriced.
Furthermore, dressing up an economy house with expensive finishings may not be the best choice. You may very likely not receive a return on your investment of these upgrades if the type of house doesn’t warrant them. Would you find $50,00 marble flooring in a $100,000 3 bedroom, 1 bath, under 950 square feet house? Probably not. Thus, here’s signs to watch out for. Don’t ruin your chances of selling, especially if you need to sell and move quickly.
Warning sign #1: Your house is priced above neighboring properties.
The real estate agent you work with should run a comparable analysis on other properties in your area. This is the first step to help pinpoint a listing price. Look online and research what a handful of properties are listed at to get a feel for a good price range and to avoid an overpriced listing.
Warning sign #2: There are no offers coming in after a few months.
The only exception to this rule is high-end homes. High-end homes tend to stay on the market longer due to a more curtailed target market. Under any other circumstance, expect there to be a handful of showings and inquiries about your property within the first month of listing it. Usually competitive bids are a good indicator that a home is reasonably priced. No luck? Your house might be overpriced.
Warning sign #3: You spoke with multiple agents before hiring the one that recommended you list at the highest price.
Most of the time an agent won’t be interested in listing a house if the seller wants to overprice it. There is a very slim chance that it will sell, thus wasting everyone’s time. If every agent you interview with suggests a similar listing price, you can bet that’s probably the most reasonable price for the particular market.
Warning sign #4: There are no scheduled showings.
Expect a few showings to be scheduled immediately once your listing hits the market and the local MLS. After about a month, if there are slim to no showings, it isn’t too late to lower the price, but act quickly. Sustain as much interest while you can; don’t let the marketing of your house slip away into no man’s land!
Warning sign #5: The house is priced based on expensive & unique amenities that may not be appreciated by the masses.
Remember the quote above? In addition, the more customized a house is, the less likely it is that a seller will see their perceived value of the house itself reflected in a reasonable listing price. Most people will perceive the value to be above what it actually is, overpriced for the market.
Warning sign #6: Are you NOT in a hurry to sell?
Many more good points about overpriced homes can be found at Maximum Real Estate Exposure. If you aren’t truly motivated to sell, what will stop you from pricing too high? It’s probably best to wait to sell until you know you are ready. That’s how the real estate process is built to function anyway; sell properties in a decent amount of time at the right price. Time isn’t always your friend and, in a real estate situation, it is most often not. Furthermore, if a property sits on the market undetected and under viewed after being listed for a month and a half, what’s the draw? If a potential buyer does come along, they’ll be apt to place a low offer. The longer a home sits, the more questions arise about why it isn’t selling.
Warning sign #7: Price mark-ups are for stores, not houses. (Oh, & don’t forget the market is king.)
The market is the overall dictator in real estate. You can think whatever you want about home values, facts and statistics. But if the market is iffy and doesn’t permit a high price for a listing, you better believe it’ll sit stagnant. Additionally, marking up the price of a listing to leave room for negotiations is for the birds. A house or property should be listed at a reasonable price off the bat, no wiggle room should be accounted for. Worry about negotiations when you start receiving offers.
Warning sign #8: Your house is listed ‘for sale by owner.’
Houses that are listed by the seller on their own without the help of a real estate professional are called ‘for sale by owner (FSBO)’ houses. These can tend to be overpriced due to the mere fact that many FSBO sellers don’t consult an agent or an appraiser to properly value their house.
Warning sign #9: Don’t assume people will sympathize with you. (Oh, & Zillow is NOT king!)
If you owe a certain amount of money on your house, still list it at the appropriate price. Do not list high and expect people to sympathize with you. You’ll either have to sell the house and take the hit or wait to sell until the market improves to yield a more desirable list price. Also, review Zillow estimates with a grain of salt. Zillow estimates can be very inaccurate. This quote sums it up nicely, “Folks lets get on thing straight – you have a better chance of seeing Big foot than you do of seeing an accurate Zillow estimate,” Bill Gassett.
Information courtesy of:
Top image courtesy of:
Home Builder Press, National Association of Home Builders