I've written about pricing issues in the past. At the end of the day, the list price of your home is one of your most important considerations. If you over-price your home, it will not sell.
I don't show over-priced homes to my clients. Why would I waste their time?
If you over-price your home, will you get showings? Maybe. Here's why:
- Agents who do not know home values may show your over-priced home. Sounds great, doesn't it? Well, not really. Because buyers, after looking at many homes to buy, tend to learn about home values and they know an over-priced home when they see one. A good agent will help their buyers learn to quickly spot over-priced homes, so they can together focus on homes that are priced to sell.
- Agents looking to show the value of another property may show your over-priced home. Why? Because after their buyers see your over-priced home, and compare it to another home properly priced in the same price range, those buyers will then see the value of that other, properly-priced home.
Even if for some reason a buyer makes an offer on your over-priced home, their lender will require an appraisal. If the home cannot appraise for the purchase-offer price, then you will most likely need to re-negotiate. What will you have to re-negotiate down to? The proper price/value of your home. It is rare that buyers will pay the extra over an appraised value of a home.
I recently turned down a listing where the sellers wanted to price their home nearly $100,000 higher than its value in today's market. Listing such an over-priced home would be a waste of my time, marketing and skills. Unfortunately, those sellers found an agent who was willing to list the home - for $150,000 more than today's market value. I don't know where that extra $50,000 came from.
These sellers will now clean their home daily to keep it in showing condition. They will wait for the phone to ring for agents to say they're going to show the home. They will vacate their home for open houses. They will stress out over why no buyers are viewing their home. They will get upset that there are no offers on their home. They will not sell their home. That's a shame.
Price your home properly from the start. Along with proper staging and marketing, your home will sell.
Don Fabrizio-Garcia, REALTOR
Connecticut Real Estate & Appraisals
CT Home Group
Keller Williams CT Realty
203.746.1199
Connecticut Real Estate and Homes for Sale
You wrote: "It is rare that buyers will pay the extra over an appraised value of a home." Sorry about the devils advocate.... but I did on my first home.... it was a different kind of market though.... I think we split the difference with the sellers. If we let the house get away there was nothing else to buy. There's something else to buy here now, in most every part of town.
Of course you have crazy high prices where you are.
Hi Maureen - Yes, on occasion a buyer will pay more than the appraised value for a home. But, generally that is in a hot, appreciating market with extremely low inventories of homes to sell. That is not the market we have in my area. Pricing a home $150,000 over value (about 35% more than current market value) won't work here - not when there's so much else - bigger, newer, in better condition and on larger lots - to choose from at that list price.
Now if the difference between the price and the appraised value was minimal, then I could certainly see both parties coming to some agreement, such as splitting the difference, as you mentioned. Or if the buyer really wanted that home, then they may pay the difference. But, that is not the norm.
Don -
Sorry to read about the lost listing. What probably will happen is this will become the house used locally by agents to show buyers what a great buy the well priced home they are considering really is.
Don, what do they say about being the third wife, or is it the third listing agent? Keep an eye on that house and maybe they'll come to realize you were the only one telling them the truth!
Hmmmm. it sure would take a lot of staging to bring the value up 35%, but...with that said...I'm glad you mentioned that staging is key to the sale. Afterall, there are only two things you can control: 1) price, and 2) show condition of the home!
Susan Smith
Rooms That Work
Your home, only better.
Catherine - We've been joking that we'll have this listing in 6 months...But if the sellers still aren't realistic about their pricing, then we'll take another pass.
Susan - You're right - price and condition are the most important issues to sell a home.
actually, it is not necessary to over priced a home even though you had value that particular home heartily. if you value that home so why should you sell it? its a very stupid dewcision or you are just saying that you value that home in order to priced it higher thatn expected, because you are thinking that the buyer will appreciate it........................well i will tell stop doing it so because it is so shame. but if the buuyer will just buy your over priced home, well your lucky.! but, please, be fair enough to priced homes. i know that it is not necessary to over priced a home because im a marketing student and my instructor is really great, very good in teaching, i really praised the way she do it so. i love my teacher because she is a good role model to us..BE REASONABLE ENOUGH!!!
Hi Reina - Some sellers believe their home is worth more than the market dictates it is worth. Either because they need the money, or because they love their house so much that they see it as being better than any other comparable home. Homeowners are usually not real estate experts, nor are they experts in valuing homes. That is the job of Realtors and appraisers.
However, as Realtors and appraisers, we need to consider the rule of Substitution - a buyer will not pay more for your home than they can buy a similar home for. They will substitute that similar home for yours and buy the one that is priced correctly. And, of course, we look to recently sold similar homes to determine what the buyers are actually paying for similar homes.
I know I saw it. That's why I asked the smart A$$ question. It looked like spam when I saw the notice that there were comments on the blog, but then there were no links. ActiveRain must have hiccuped twice fast because they did look identical.
I tried leaving a comment on Maureen Francis outside blog last Friday and it would not take. I feared I was going to end up with three comments in a row. They would not have been identical though because I could not remember what I wrote.
Wouldn't it be great if you could get the seller who wants to overprice a home to just say "it is not necessary to over priced a home " and show your credentials and they would understand and comply?
Maureen - Yes, I wish all sellers would realize we price their homes to SELL not to insult them. Pricing the home to sell is part of our job.