It seems like the topic that has been posted on this blog is the importance pricing your home correctly. The reason is this is probably the most important factor in selling your home. Yet it is the part of the process many sellers do not take the advice of their listing agent on this topic. For example a seller will listen to an agent every single then get to the pricing phase and completely ignore their agent. They say things like “I know my home and what it is worth” or “I NEED to get X dollars for my home” or “well my cousin thinks I can get X dollars for it”. Your real estate agent should do their research and get you as much data as possible to show you where they are getting the value of your home and support their advice.
You Really Need to Be Close To The Right Value Out of the Gate
One reason to listen to your real estate agent about price is time is an important piece of the puzzle. I am not talking the fact you want to sell fast or you have all the time in the world, I am talking about a specific point where a listing becomes stagnant. There are stages every listing goes through. The first couple weeks of any listing is the most important. That is when the listing gets the most views online as well showings. There is absolutely no denying this. It is extremely important to be priced close at this point or people will just scroll to the next listing. Especially now since the market is shifting to the buyers more and more.
The moment that listing hits the MLS a clock starts ticking. The more time that passes for any reason lowers (ever so slightly) the chance your home will sell. Each market area has it’s own benchmark of when you need to sell by before the listing becomes stagnant. Most markets in the area are between 30 and 60 days right now. Those numbers will change as the market does. Some markets 80% of the homes are selling in less than 45 days. The other 20% are spread out over about the next 160 days or expire or are withdrawn. It is extremely easy to not understand the market and become part of the 20%. That is why it is so important to listen to your listing agent.
It’s OK to test the market if you have a plan
It is perfectly OK to plan with your real estate agent to list a little high as long as you have a swift plan in place. For example, I will list home that I feel is worth $325,000 at $350,000 if a seller insists. I will only take that listing if the seller understands their home is priced too high. I will find comparables and show them what I believe the true market value to be. I will then let them know that if the home doesn’t sell in 3 weeks or so the price will be adjusted to the price I feel is correct for listing. This needs to be done in one reduction not a bunch of $300 price reductions. That is how a seller chases the market done and it is the fastest way to reduce the market value and interest in your home.
Yay we got our asking price! Oh no it didn’t appraise
Let’s say you find someone that must have your home. They just can’t live without it. They would do anything to have your perfect home. They have been looking for 6 months and this is the only home they want. They make an offer at full asking. They are so exited. About 3 weeks into the contract the lender calls with the outcome of the appraisal. It didn’t appraise! No worries, the buyer really wants it so they will close, right? Well not so fast, first of all no one wants to buy a home they are in negative equity. Also the bank will only lend on the appraised amount. So instead of needing to bring $30,000 to closing they now need to bring $50,000? and that $20,000 just vanishes into negative equity. They are basically giving you an extra 20K to buy their home and getting nothing in return. In other words you can even have a contract for full price but it won’t close at that amount.
Real estate agents can’t magically sell a home that is over priced
So many sellers think that it is the responsibility their listing broker to get over asking price. I have had so many listing appointments where the seller says to me “Joe D. Realtor told me he could sell my home for $500,000 and you say it’s only worth $425,000 why wouldn’t I use the other Realtor that can get more?” It is understandable for people to think this is a real possibility. It is highly unlikely and changes are you need to lower price to the $425,000 if you really want to sell. The best way to look at this is to compare to a stock. At the time of the writing of this post IBM was trading at $134.30 per share. What would happen if we tried to sell our 100 shares of IBM for $175.00 a share today? Well that sell order would just sit there until it expires. Well your home will do the exact same thing!
The last bit of advice I can leave on pricing your home is make sure you look at homes in your area and compare it to the condition of your home. That is why a real estate agent can price your home better. They are a 3rd party that look just at the facts. So many people think their home is the nicest one on the block. Remember not everyone can have the nicest home on the block!
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