The Dirty Little Secret About Pricing Your Home for Sale (Part 2)
This article is part of our For Sale By Owner (FSBO) series (Part 2).
Did you know most agents list homes at a price where the property will not sell? Over 70% of homes on the market today are overpriced! This means that they will require one or more price reductions before they do sell. For some reason, real estate agents don’t want to admit that dirty little secret…that they will list your home at a price that is too high. And they know it’s too high. You may be saying, “OK…so they priced it too high initially…no big deal…I can always come down.” But here is the shocking truth:
Overpriced listings end up selling for less because they sit on the market too long and become stagnant. After weeks and weeks on the market, buyers and agents start to ask, “What’s wrong with that house?”
The WWWTH Syndrome
We call it the “WWWTH Syndrome.” What’s Wrong With That House? The price. That’s what’s wrong with that house. There’s another question that some buyers and agents will ask: “What’s wrong with those sellers?” You see, when a house sits on the market for a long time, folks just start to assume there’s a problem beyond the price. They think there must be a lot of needed repairs, or it’s ugly inside, or the sellers are difficult to deal with. They figure it’s not worth their time to even see that house. The sellers are probably a hassle to work with anyway.
The Facts Don’t Lie
Here are the actual statistics: Of these overpriced listings that actually end of up selling (not including the ones that don’t sell at all), they sell, on average, for only 87% of their original asking price. And they take over 120 days on average to sell! Homes that are priced correctly from the beginning, sell for over 97% of list price with an average of only 45 days on the market.
Here’s the Truth
The TRUTH is that the “price-it-high, come-down-later strategy” actually costs you precious equity…2%, 3%, 5%...or even more. When your home is initially priced too high, you lose the opportunity to get the premium value for your house because of this simple, statistical fact: the longer a house spends on the market, the lower the offers it generates. This happens for two primary reasons:
- 1. The “WWWTH Syndrome” (see above) causes buyers to offer less for the property – if they’re willing to make an offer at all.
- 2. After price reductions, buyers and agents perceive an increased motivation from the sellers – so they make lower offers thinking the sellers are now desperate. It doesn’t matter if it’s true or not. Their perception costs you money – a lot of money.
Beware of real estate agents who set the list price on homes at unrealistically high levels. Why do they do this? To get your listing. They will tell you what you want to hear because they are afraid if they tell you the truth up front, they might not get your listing. Do you want to hear the truth? This is a question that you, as an owner selling their own home, need to ask yourself. Because pricing a home can be emotional. And this is a time when you need to be rational. An agent who feeds into your emotions – and doesn’t tell you the real deal – is not helping you.
You May Not Want an Agent…Now
We know that you want to sell your home on your own. I hope that you are among the small percentage of homeowners who are successful! Our job is to help you. If you call us up and ask us to help you price your home, we’ll do it! But we’re going to tell you the truth. So, here it is:
The market value of your home:
- The market value of your home is not the price you need to get.
- The market value of your home is not the price you want to get.
- The market value of your home is not the price your neighbor got (or told you they got) for their home. -
- The market value of your home is not the assessed tax value.
The market value of any home is the price someone is willing to pay for it. The best way to initially price your home is to look at homes similar to yours in the same area that have sold recently. Even then, there is no guarantee that you will get that price for your home. It’s an educated guess. You might get more – you might get less. How you price your home should be strategic. Honestly, a real estate agent with years of experience and a solid track record knows how to do that. It just isn’t something you learn overnight.
Are You Good at Your Job?
What kind of work do you do? Are you good at it? We bet you are. It probably took you years to learn how to do your job. Maybe you earned a degree. Or went to a technical or trade school. So, ask yourself, “Can anyone do my job?” Now, you might be able to fix a leaky faucet, but that doesn’t make you a plumber. You probably know how to put on a band-aid, but that doesn’t make you a doctor. You get where this is going, yes? Selling real estate is a profession. Every person who tries to sell their own home thinks it’s going to be easy. Maybe your job looks easy – from the outside.
Our Commitment to You
We will always tell you the truth. And THE TRUTH IS…we don’t want your listing. We want to help you get what you want…which is to get your property for the highest price, in the least amount time, for as little hassle as possible.
That is our commitment to you.
One last thing: Consider using our Smart Seller listing agreement. We will put your home in front of hundreds of buyers weekly. There’s zero obligation and you can cancel at any time.
We have a lot more information to share with you – be sure to read the next article in our FSBO series. (10 Things You Absolutely Must Know to Sell Your Home Without Leaving a Penny on the Table)
NTREIS data last updated June 21, 2021.