You’ve decided to sell. You’ve looked at the market. You’ve determined a price. You’ve listed. It’s not selling. Where are you going wrong?
It is imperative to price a home properly to achieve maximum proceeds. I am a big believer in the efficiency of markets. An underpriced house will get multiple offers and bid up, and an overpriced house will generally sit until the price is adjusted into the appropriate range. Overpricing is detrimental to the seller and is just as bad as presenting with cluttered and poorly-lit cell phone photos. Here are some mistakes to avoid and signs that you might need to re-evaluate your strategy to get on the right track.
1. You pick the agent who gives you the highest price, primarily for that reason
If you’re interviewing multiple agents, don’t let an agent “buy” your listing. Some agents overvalue a home to appeal to the seller’s ego, expecting that they’ll secure the listing and manage to get price reductions later. I always give my sellers the most realistic picture of the market I can and if they want to try a higher price than I recommend, sometimes I do not take the listing. Other times, there is an agreed strategy – we’ll test the market at the seller’s price for 21 days and then reduce to the range I suggested if that does not work. Time is the enemy of the seller and the agent buying your listing is not doing you any favors. In fact, price is rarely a reason to select an agent – a strong understanding of the market is far more valuable than someone who can put a higher sticker on your house and fail to achieve what they promise for you.
2. You select a price substantially over the other sales in the neighborhood because your property is special
We know, your house is special. I don’t think I’ve ever met a seller who didn’t think his or her place was better than his or her neighbor’s virtually identical property. Don’t get me wrong, there are some really special properties that command a premium because of incredible views, floor plans, or renovations, but what you value in your home may not be what the market will bear. Is your million dollar view REALLY worth a million dollars, or does it really only add half of that? In some markets, people will pay a lot more for properties that are “done” to avoid the hassle of renovating, but renovation dollars do not come back to sellers 1 to 1 most of the time.
3. You overvalue improvements that were done a long time ago
“Renovated” is a strong word. It can mean a lot of things. Some agents use it to mean “new countertops and appliances with 1987’s cabinets” whereas others refer to a total gut with designer finishes. With that said, the gorgeous kitchen you did when you moved in 2002 is no longer “renovated”. It is now of an age where it can obtain a driver’s license in most states, and the new buyer of your home will likely want to make some major changes to it in the next couple of years. While an older renovation may garner a higher price than something that is offensive and needs to be done immediately, it does not command a premium. HGTV seems to have shortened the shelf-life of renovations as buyers become hyperaware of current trends.
4. It isn’t selling
I can’t tell you how many times I’ve heard sellers say “we just need to wait for the right buyer”. There are some properties that can take longer to market because they are specific, but in general, most properties aren’t unique. If your house is languishing on the market for more time than is typical, it’s one of two things – the presentation – or the price. Your agent should be pushing you to make the appropriate adjustments to both.
5. You’re getting multiple offers well below what you’re asking
Buyers aren’t stupid. Sellers like to assume that they can pull one over on a buyer, but buyers have more access to information than ever before and they have a pretty good sense of the market because they’re out in the marketplace looking at all kinds of properties, whereas the seller generally is only exposed to his/her own home. If you’re getting offers that are lower than what you’re asking and they’re in the same range as each other, it’s probably a pretty good indicator that the value of your home is not what you think. Start negotiating!
6. You select a price that pays you back what you put in, without market justification
Your mortgage balance, investments and improvements into the property, total cost basis, or commissions aren’t of interest to the buyer. Sellers tend to expect a transaction to make them “whole”. Please remember that your primary home is not and was not an investment – it was a place you lived and hopefully enjoyed. When it comes time to pass it on to the next person, your situation will not sway the value. Recent sales and the quality of your property as compared to others in a similar price range will dictate what buyers are willing to pay.
Have questions on how to price your home? Contact me for a consult.
Sammy Dweck, REALTOR
TTR Sotheby’s International Realty