Pricing your home is not an exact science. The “human-factor” is much too complicated to pin-point with that much precision, even with all the hard data collected on the market.
Whether you’re selling your first home, or are a veteran flipper, pricing your home to attract a buyer…one who is willing,able and ready to go… needs a primary slot in your home selling strategy.
Get it right and your home flies off the market…many times with multiple offers.
Miss it by much and you prolong the selling time (and the stress that goes with it) over many more weeks – even months – than necessary…
As you tinker with the price until it’s finally “right”.
You lament all the buyers who passed your home up for another before you hit the target. ..
Trouble is, there’s just too many myths out there about pricing your home…myths so widespread, it’s hard to figure out what’s right.
I’ve done some digging into the most pervasive myths surrounding pricing your home and and dismantling the top 3 causing the most confusion…while wreaking the most havoc with a home sale.
Myth #1: If a Buyer Is Willing To Go Over My Price, It Must Be Worth It
A low inventory situation like we are experiencing in our current market can sometimes fuel a bidding war when a desirable home hits the market at the right price.
Auction fever ignites and bids can spiral well over the asking price.
You’re elated! The best offer was well over your asking price.
But then the Appraisal arrives…and it’s under the selling price.
Why is this a problem? After all the buyer is willing (and happy) to pay an inflated price
Unless the highest bidder is paying cash, the lender still has the final say.
And there’s the appraisal contingency matter that stands in the way of a successful bid making it to the closing table (Indiana Assn. of Realtors Purchase Agreement – Improved Property)
” If Buyer obtains an appraisal of the Property, this Agreement is contingent upon the Property appraising at no less than the agreed upon purchase price. If appraised value is less than the agreed upon purchase price, either party may terminate this Agreement or parties may mutually agree to amend the price.”
A big part of obtaining the necessary financing is a satisfactory appraisal…
Even with perfect credit and the necessary cash-to-close, a loan will be rejected if the appraisal reports the property isn’t worth what a buyer agreed to pay.
You either agree to sell at the appraised price, ask the buyer to come up with the difference in cash (not very likely), or go back to square one…
Myth #2: Pricing a Little High Will Give Me Some Negotiating Room
But wait… you decided you wanted to build in a little room to negotiate…room to come down a little
Because that’s what Buyers expect, right?
When you price it with room for negotiations, guess what you get?
You get negotiations!
Today’s Buyers are pretty savvy…they have a wealth of market information as close as their smart phone.
They know what they should be paying for your home and will write their offer accordingly
If the price is spot-on, they not only know it, they know all the other buyers searching for a home like yours are going to spot it as well.
Agents watching the “hot sheet” will notice a well-priced home in a flash and send it out to eager buyers, knowing they will need to be quick on the draw if they want their clients to have a chance.
Negotiating the price down will be out of the question if they want to come out the winner.
But homes priced a little high? The ones with room to negotiate?
A buyer will typically offer even lower in hopes of getting a “deal”…
Then when you balk, they complain bitterly that “nobody expects to get full price.”
Negotiations can get contentious, and with principle at stake, both sides dig in and refuse to budge over principle, even when they’re within a few hundred dollars of an agreement.
You feel you’ve lost because you’ve already “come off your price” but…
In reality, you only agreed to what it was really worth…where it should have been priced from the beginning.
If buyer’s felt like they “lost” in negotiating, they may try to salvage their pride with unreasonable demands over inspections.
Did you spot the difference? When a home’s price is on target with the market, it’s a win-win for both sides..
Depressing as it may be, we humans will do far more to avoid loosing than we will to win.
Myth #3: Outdated Features Shouldn’t Affect the Selling Price
Your home may have had meticulous care, a brand new roof and the best replacement windows money can buy…
But if your “upgrades” from 1990 were white melamine cabinets, beveled edge laminate counters and builder grade 12-by-12-inch tile with brass fixtures…
Today’s buyers will either calculate the costs to bring it up to today’s standards and write it into their offer or keep looking for a home with the updates they’re seeking.
As it turns out…being stuck in time rarely brings you financial rewards.
Most buyers are looking for turnkey homes.
Today’s busy buyer would rather pay $15,000 more for a home than invest $5000 in upgrades.
So…what features are bringing the highest prices and the quickest sale?
- Lots of storage space – yesterday’s closets just were’n’t designed for today’s necessities
- Master with en-suite bath – preferably on the main floor
- Stainless Steel Appliances
- Granite counter tops and glass-tile back splash
- Hardwood floors
- Trendy paint colors
Lacking some…or even all…of these features doesn’t make your home unsale-able…
It just makes it that much more important to understand what buyers are wanting…
And to apply this knowledge when pricing your home.
Does This Make Sense to You?
This should clear up any confusion about these home pricing myths…but I know there must be others…
What else has you confused about pricing your home correctly?
Let us know in the comments.