In today’s housing market, many sellers are making a critical mistake by overpricing their homes. This often leads to properties sitting on the market for extended periods with little interest. When that happens, sellers may be forced to reduce their asking price to attract buyers, which can diminish the perceived value of the home.
According to data from Realtor.com, an increasing number of homeowners are recognizing their pricing mistakes and subsequently reducing their listing prices (see graph below).
If you’re considering making a move, it’s crucial to avoid costly mistakes by working with a trusted real estate agent who can help you price your home correctly. Here’s why getting the price right from the start matters.
Overlooking Current Market Trends
Accurately pricing your home requires understanding the current market, not relying on outdated trends from the pandemic. With the market having moderated since then, it’s crucial to align your asking price with today’s conditions.
Real estate agents stay informed on market trends and understand how they influence your home’s pricing strategy.
Pricing It According to Your Desired Profit, Not Its Actual Value
Another common mistake is setting the price based on your desired profit rather than the current market value. You might notice similar homes in your neighborhood selling for high prices and think yours can achieve the same. However, you may not be accounting for differences in size, condition, and features. For instance, the other property might be waterfront or have a finished basement. In summary, Bankrate explains:
“How do you find that sweet spot of pricing for profit but not overpricing? The expertise of your agent can be truly valuable here. A knowledgeable agent will understand fair market value in your area, how much your house is worth and how much you might reasonably expect to get for it in the current market.”
An agent will conduct a comparative market analysis (CMA) to ensure your house is evaluated alongside genuinely comparable properties, providing a precise assessment of its ideal price.
Setting a High Price to Allow for Negotiation
Another common but flawed strategy is to intentionally price your house high to give yourself more room to negotiate down during the sale. However, this approach can backfire. A price that appears too steep may deter potential buyers from even considering the home. Instead of creating negotiating space, you might end up driving buyers away. U.S. News Real Estate explains:
“You want to sell your house for top dollar, but be realistic about the value of the property and how buyers will see it. If you’ve overpriced your home, chances are you’ll eventually need to lower the number, but the peak period of activity that a new listing experiences is already gone.”
An agent can assist in setting a reasonable price that attracts buyers and generates more competitive offers.
In summary
Overpricing your home can lead to significant drawbacks. An experienced real estate agent offers an objective viewpoint, extensive market knowledge, and a strategic approach to setting the right price.
Get in touch with a Benson & Mangold agent to help you avoid a pricing mistake that could be costly.
