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I want to be brutally honest with you about something that’s going to be very important to know, should you decide to put your home up for sale. It’s about the price that you choose to put your home on the market for. I want to give you the honest truth about your home’s list price. Ready?
Here it is: in most cases, your home’s list price actually has little to do with what your home is going to sell for. In reality, your home’s list price is actually all about your marketing strategy.
When deciding on a list price, one of the key questions you want to ask yourself is, “How long do I want my home to be on the market?” It is perhaps not surprising to hear that the higher the initial listing price (relative to competing properties for sale in your market), the longer you can expect it will take for your home to sell.
Sales statistics show that the longer your home sits on the market, there is an increasing likelihood that your home will sell for less than list price, and that typically, the longer it sits, the greater the “discount” off list price. It’s a hard way to learn that you’ve overpriced your home.
Funnily enough, sales statistics also show that the opposite is true: when homes sell quickly, they often sell at full asking price, and in our market, they commonly sell for a healthy premium over asking price. So when it comes to setting your home’s list price, the question to ask yourself really is, how quickly do I want to get my home sold? Because that’s the question you’re answering when you set your list price.
Many Realtors will tell you that overpricing your home can result in you ultimately receiving a lower sale amount than if you’d priced your home competitively from the get-go. So far as I can tell, this is all anecdotal; I haven’t ever seen any statistics that “prove” it to be true.
But it makes a lot of sense, if you think about it. In any given 30 day window, there are only so many buyers looking for a home like yours. When a new home comes on the market, this pack of buyers – which could number only in the dozens, or perhaps a few hundred – see your property come on the market. They’ll evaluate it from the on-line marketing, and decide if it’s worth seeing in person or not.
Whether they see it in person or just online, they’ll square their sense of market value with your asking price and decide to move forward with an offer, or not. If they sense the price is too high, more likely than not they won’t ever make an offer and they’ll move on. You’ll have lost those buyers, and it’s difficult to get them back – they’ll already be looking at, and making offers on, homes they perceive as a better value.
So what’s to stop them making an offer, if they like the house but feel it’s overpriced? Nothing, of course – except that most folks aren’t accustomed to grinding a seller down on price.
Please understand: most buyers in our market will see a price and think the seller is expecting to get that much, or more. Buyers in our market are actually acculturated to paying more than asking price for a home. Many have a sense that any home worth having will get multiple offers and sell over asking price.
Trust me: it’s a lot more exciting as a seller to get a half dozen offers in two week’s time than to have your home sit on the market for months and wind up with one low-ball offer from a buyer who’s going to nickel-and-dime you for every little defect, perceived or otherwise. It’s a far better experience to have multiple buyers fight against each other to see who can get you the very best offer, taking the property as-is, over asking price, warts and all.
Does that sound good to you? Then do yourself a favor: price your home competitively, to sell in a short period of time, and reap the rewards of a high sale price with a short time on the market.
I know what you’re thinking: yeah, but if I list my home at a price that’s too low, am I not just giving it away? Won’t I potentially be leaving money on the table?
The answer to that is a resounding NO!
There’s a misperception out there that if you receive a full price offer for your home that you are legally obligated to accept it. Nothing could be further from the truth. Check out this legal opinion from Shannon Jones, one of the sharpest real estate lawyers working in our area:
Question: I am representing a buyer who made a full-price offer on a property. The seller issued a counter at $38,000 more than the offer. The buyer rejected the counter. The seller subsequently lowered the list price. My buyer made the same offer, which was subsequently rejected. Does the seller have to accept the buyer’s offer, since the offer was at or exceeded the list price?
Answer: No. A list price is an invitation to buyers to submit offers. Therefore, a seller does not have to sell at the list price. However, a seller may not reject an offer based on an improper purpose, such as discrimination. (emphasis added)
That’s exactly right: your home’s list price is just an invitation for buyers to submit offers, that’s all. It does not obligate you to sell your home at that price, or any price.
If you price your home competitively – and by that, I mean 1-5% below “fair market value” – you will get offers. A key piece of the strategy is to not accept the first offer that comes along, and know that you are under no obligation to do so. Instead, you need to make sure that your home gets maximum market exposure, and enough buyers get through the door.
In our area and in today’s market, a two-week marketing period is ample time to get the most ready, willing, and able buyers to present offers. With multiple offers, you are in the driver’s seat and can work the buyers against each other to get the very best price for your property – and you’ll have done so with a minimum of uncertainty, hassle, and risk.