The Dangers of Listing Your Home at the Wrong Price
When it comes to selling a home, there are multiple factors a seller must keep in mind. It may seem as easy as looking up the price of the home that sold last week down the block, but sellers really shouldn't fall into this simplistic trap. Keep these warnings in mind to avoid making a major mistake.
The price of the home sets an anchor in people's minds, regardless of whether a person goes too high or too low. And while this term is often used to describe consumer goods, it applies to any item for sale. A person may only be so willing to raise their bid when it comes to a home that's priced too low (even taking into account a bidding war). On the other hand, it may be difficult for a seller to disentangle themselves from a home that's priced too high.
The right starting price for a home can have a big impact on the bottom line, and it doesn't involve having to repaint the garage or replace the floorboards.
The Variance of Homes
Most sellers have some powerful emotions attached to their home that they end up unwittingly projecting onto potential buyers. Sellers don't see the cracked stairs leading up to the front door, they see the family photos that were taken on holidays. But buyers are coming into the home search without the same perspective, and they may not appreciate that the home is listed at the same price as the bigger one down the block.
If a person overprices their home based on these feelings, it's likely to upset real estate agents and buyers alike. People may be less inclined to see the home even if it does drop in price. (If the price strategy isn't working, most experts will warn sellers to change as early as possible.) Sellers should use pre-inspections and appraisals to get it right in addition to studying the current market in the area.
Create a Range
One thing that can get sellers into trouble is setting a single price point in their heads. No matter how reasonable it may seem at the time, it can trap a seller into refusing perfectly acceptable offers. This can ultimately waste a seller's time and may lead to further short-sighted decisions. Some sellers use range marketing as a tool to get eyes on their property.
Value range marketing starts with two price points:
- Low: Sellers should set a price for the home that would be difficult to turn down, even if it wasn't their ideal offer.
- High: Sellers should declare a realistic price at which they would instantly sell the home if a buyer came in with cash that day.
Once a seller has these two numbers, they can consider listing the home as a range (e.g., $200,000 – $218,000) rather than a set price. This gives buyers some indication of how much wiggle room they have, which can end up attracting more people to see the home. Those in a seller's market can collect multiple offers within the range and evaluate based on the contingency requests, financial history, and strength of the offer.
In addition to a Hermosa Beach home seller doing their own work when it comes to the market, it always helps to talk to a real estate professional before setting a price. The more the seller seeks out help and feedback, the more they'll set themselves up for success during the sale. Some real estate experts go so far as to say that the initial price is the most important factor when it comes to home selling. While this is a subjective opinion, it does highlight the importance of getting it right the first time.