If you’re selling your home, you need to understand that pricing your home correctly from the beginning is absolutely critical. The most common reason a home doesn’t sell is that it is overpriced.
Overpricing a home can create damaging effects, period. The probability is that if you price your home too high, in the beginning, you will likely end up with less money in your pocket, which is obviously not the goal when selling a home.
When selling your home, it’s absolutely critical you do not overprice it. If you happen to make the mistake of overpricing your home, you must immediately identify this mistake and make a change immediately.
How does a seller know if their home is overpriced? There are actually many telltale signs to know if what you are asking does not meet market expectations. Below are the top 10 signs that your home is priced too high.
If you’re selling your home and have experienced any of the telltale signs below, make sure you adjust as soon as possible!
Your Home Is Priced Much Higher Than Your Neighbors
Generally speaking, in most neighborhoods, home values will be relatively consistent and close. One telltale sign to know that your home is overpriced is if your home is listed $100,000 higher than other homes for sale in your neighborhood.
While it’s not impossible that there can be homes with a $100,000 value difference, it is quite rare. One of the most common methods that real estate agents will use to determine a home’s value is by completing a comparative market analysis. A comparative market analysis, also known as a CMA, is best described as a detailed analysis of sold homes in the past 6 month time period in a given neighborhood.
If your home is priced much higher than your neighbors, it’s very possible your real estate agent didn’t complete a detailed analysis of value. If a CMA wasn’t completed, this will not only lead to your home being overpriced but also can create issues with bank appraisals.
You’ve Had Very Few Or No Showings.
Excitement is a widespread emotion that a seller experiences. Sellers are generally happy their home is listed for sale and being advertised all over the internet. Weeks pass by, and there have been a couple or, even worse, zero showings.
That excitement now turns to concern and frustration. If this sounds familiar, the likelihood that your home is overpriced is high. If your home has been listed for sale for a few weeks and you’ve had only a couple of showings, you need to adjust the price in the hopes of generating some activity and showings.
You Haven’t Received An Offer.
In most real estate markets, if a home is priced correctly, a homeowner should receive at least one offer within the first two to three weeks. If you haven’t received an offer after a couple of months, this is a great way to know your home is most likely overpriced.
If your local real estate market is currently in the midst of a seller’s market, you should expect an offer on your home within the first couple of days on the market if it’s priced correctly.
Certainly, there are types of properties that may take longer than a couple of days or months to receive an offer on, but it is fairly rare. This typically exists when selling a luxury home or waterfront property.
You Hired The Agent Who Recommended A Much Higher Price
Real Estate Agent With Highest Price In any given real estate market, there can be hundreds to thousands of real estate agents. When you are interviewing prospective Realtors to sell your home, you must know what questions you should ask during an interview.
One of the most important questions relates to the pricing. You must understand how the prospective real estate agent came up with your home’s listing price. If you interview, 3 real estate agents and one of the real estate agents suggests a price that is $30,000 higher than the others. You need to know how they came up with that number.
Many real estate agents will “buy a listing” by suggesting a list price much higher than the market value. If you made a mistake and hired the real estate agent who suggested a much higher listing price, your home is likely priced higher than it should be.
Neighbors Homes Are Selling & Yours Is Not
One of the most frustrating things for a seller is when the neighboring homes are selling, and theirs is not. If you’re selling your home and this is happening, this is a sign that your home is priced too high.
A common statement from homeowners who are selling their homes is, “My neighbors home just sold for $200,000, and mine is much nicer than theirs. Why isn’t my home selling?”
Many sellers fail to understand that there are so many things that can influence the sale of a home. If this sounds familiar, a couple of things to keep in mind when it comes to comparing your home to your neighbors include;
- Was your neighbor’s home a different style of residence? Ex; ranch vs. two-story colonial
- Was your neighbors home larger?
- Did your neighbors home have high-end upgrades and amenities? Ex; granite counters, building additions, etc…
- Is the location of your home inferior or superior to your neighbors? Ex; corner lots or private/wooded lot
- Were the mechanics of your neighbors home newer than yours? Ex; new roof, windows, furnace, etc…
- Bottom line, if your homes are selling in your neighborhood and yours is not, it’s probably overpriced.
Open Houses Are DUDS
One decision that should be made by homeowners who are selling their home is whether or not they want open houses. Statistically speaking, less than 2% of homes actually sell as a direct result of an open house. Open houses provide potential buyers the opportunity to look at homes without feeling the high pressure that some real estate agents may place on them.
If you believe that open houses are necessary to sell your home, what does it mean when the open houses are DUDS? If your real estate agent markets the open house and not one person walks through the door during the 2-hour open house, then your price could be an issue.
Like most, buyers have busy schedules, but a buyer will take the time to visit open houses if they are interested in a home. A buyer will, however, not waste their time if they feel a home is overpriced.
Internet Traffic Is Very Low
The internet has changed real estate industry over the past 10-15 years. The majority of home buyers are beginning their home search online. When buyers are interested in a home they see online; they will reach out to either the listing agent or contact their own real estate agent to schedule a private viewing.
One way to know your home is overpriced is to have little to no internet traffic or property inquiries. An experienced real estate professional who has a strong understanding of how to market homes for sale online should be able to provide traffic statistics and property inquiries.
Showing Feedback Indicates Your Home Is Overpriced
Feedback Home is Priced Too High One of the biggest benefits of hiring a top real estate agent is knowing the importance of receiving feedback on their listings. Feedback from other real estate agents and buyers who are viewing a property can be a huge help. If you’re not receiving feedback from showings, it may be time to think about firing your real estate agent.
Feedback is important because it allows a homeowner the chance to correct things a buyer may object to. For example, if a prospective buyer indicates the paint colors are too “bright,” it may be time to consider repainting the room.
If the feedback from showings is that a home is overpriced, this allows a seller to adjust the price.
You’ve Received Low Ball Offers.
Most overpriced homes will not receive any offers; however, it is possible. Homeowners who overprice their homes and still receive a couple of offers should feel somewhat fortunate.
It’s a good chance that if a home is overpriced, the offers received are “low ball” offers. If a home is overpriced and offers are much less than the listing price, is it really fair to consider them “low ball” offers?
If you’re selling your home and have received several offers that you would consider “low ball” offers, you may need to reconsider whether your price is appropriate.
Your Home Didn’t Sell & Expired.
Possibly the most obvious way to know a home is priced wrong occurs when it doesn’t sell and expires. If a home doesn’t sell and becomes an expired listing after 6 months, it’s not because there are not ready, willing, and able buyers in your local market.
Instead of blaming it on the lack of buyers or the local real estate market, it’s important a seller looks in the mirror and realizes that their home was overpriced. Every home has a price tag that is acceptable to home buyers. If a home’s listing price is relatively close to the number a buyer considers fair, it will sell and not expire, period.
The Importance Of Pricing In Real Estate
The number one reason a home sells is that the price was right! Determining the list price of a home is such a critical piece of the home selling “puzzle.”
If you put the correct price on a home, it will sell in a relatively quick time frame. If you choose to overprice your home, it will either not sell or take several months to sell. If you choose to overprice your home, remember that you will likely receive less money for your home than to price it from the beginning correctly!